Report and Accounts 2006
British Polythene Industries PLC
THE BEST WAY TO GET THE JOB DONE
BPI-001 REPORT COVER.qxp  20/4/07  09:42  Page 2 REDUCE
BPI technician, Myra Hammond,
examines the surface structure of a new
polythene film. Extensive testing is
carried out in our laboratories to ensure
that, as products get thinner they retain
all the physical properties required to
meet our customers’ needs.
Turnover
(£m)
414
410
2005
359
2004
Profit before tax 
(£m)
14
.0
19.7
2005
11.0
2004
Earnings per share
(pence)
38
.46
54.28
2005
31.50
2004
Dividend per share 
(pence)
22
22
2005
21
2004
BPI-001 REPORT COVER.qxp  20/4/07  09:34  Page 2 CONTENTS 
Report by Directors & Business Review
02 Group at a Glance
06 Chairman’s Statement
10 Market Overview
11 Strategy
11 Risk Factors
14 Chief Executive’s Review
19 Environmental Facts
23 Corporate Social Responsibility Review
30 Financial Review
32 Board of Directors & Advisers
33 Corporate Governance Report
36 Directors’ Remuneration Report 
Financial Statements
42 Statement of Directors’ 
Responsibilities
43 Independent Auditors’ Report
44 Five Year Record
45 Consolidated Income Statement
45 Consolidated Statement of 
Recognised Income and Expense
46 Consolidated Balance Sheet
47 Consolidated Cash Flow Statement
48 Notes to the Consolidated Financial
Statements
68 UK GAAP Parent Company 
Balance Sheet
69 Notes to the UK GAAP Parent 
Company Financial Statements
76 Information for Shareholders
Introduction 01
We manufacture over 300,000
tonnes of polythene products 
in a year for a wide variety of
applications, but we continue 
to utilise less oil-based raw
materials as we promote the
principle of REDUCE, RE-USE
and RECYCLE.
REDUCE
BPI continuously works with its customers to 
minimise the weight of its products and their 
packaging. Today, our products have reduced 
in weight by 5,000 tonnes per annum over 
like-for-like products five years ago.
RE-USE
Plastic film products are designed to do a 
specific job of protection and containment 
with the lowest material use possible. Often 
their very lightweight nature makes them 
less suitable for re-use. A notable exception 
to this is carrier bags. According to DEFRA 
figures, at least 80% of UK households 
re-use carrier bags at least once. 
RECYCLE
BPI recycles over 70,000 tonnes of plastic 
waste every year at its UK reprocessing 
plants including waste from industrial, 
commercial, agricultural, automotive and 
domestic sources along with all of our own 
process waste.
CAUTIONARY STATEMENTS
This document is addressed to shareholders of British Polythene Industries PLC and has been prepared solely to provide information
to assist them in assessing the Company’s strategies and their potential for success, and to inform them of the Company’s
performance during the year ended 31 December 2006.
This document contains the Directors’ Report and enhanced business review, Directors’ Remuneration Report, full accounts and the
Auditor’s Report on those accounts.
This document contains forward-looking statements based on knowledge and information available to the Directors at the date the
document was prepared. Although the Directors’ expectations are based on reasonable assumptions, these statements should be
treated with caution due to the inherent uncertainties underlying any such forward-looking information and any statements about
the future outlook may be influenced by factors that could cause actual outcomes and results to be materially different.
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 1 The Group operates in two principal
geographic regions, the UK & Ireland
and Continental Europe. 
REPORT BY DIRECTORS & BUSINESS REVIEW
GROUP AT A GLANCE
GEOGRAPHY
79% UK and Ireland
21% Europe
The business has three main processes
to produce plain film on the reel,
printed and converted products and 
products made from recycled material.
PROCESS
We sell our products to a large 
number of customers in a wide 
variety of market sectors. 
END USER MARKETS
31% Retail Food Chain
10% Non-Food Retail
24% Agriculture & Horticulture
14% Industrial
8% Services
13% Construction
TURNOVER 
TURNOVER 
TURNOVER 
PROFIT
57% UK and Ireland
43% Europe
18% Recycled
39% Film
43% Converted
CAPITAL EXPENDITURE
38% Converted
17% Film
45% Recycled
02 Report by Directors & Business Review
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 2 % Services
% Construction
NET ASSETS 
74% UK and Ireland
26% Europe
MAJOR CUSTOMERS
UK & IRELAND
Alcan
Amcor
Bord Na Mona
Britvic
Bunzl
Coca Cola
Hanson
Jewson
Morrisons
National Health Service
Premier Foods
Tarmac
Tesco
Travis Perkins
United Farmers
Warburtons
Westland
Wolseley
EUROPE
Akzo Nobel
Baltensperger Farmtechnik
Clarebout
Dow Chemicals
McCain
Naturado
Sabic
Schmidt Ulrich
William Sinclair
MAJOR PRODUCTS
FILM
Silage stretchwrap
Packaging stretchwrap
Collation shrinkwrap
Speciality films
Horticultural films
CONVERTED
Heavy duty sacks
Form fill & seal
Pallet covers
Liners
Produce & bread bags
RECYCLED
Refuse sacks
Swing & pedal bin liners
Damp proof membranes
Damp proof course
MARKETS
RETAIL FOOD CHAIN
Fresh produce
Frozen foods
Cans & bottles
Pet food
Refuse sacks
Transit packaging
NON-FOOD RETAIL
White goods
Furniture & carpets
Hair care
Mailing film
Transit packaging
CONSTRUCTION
Builders merchants
Brick & block
Aggregates
Insulation
INDUSTRIAL
Polymer
Additives
Speciality chemicals
Salt
Container liners
SERVICES
Health authorities
Local government
Catering
Janitorial
AGRICULTURE &
HORTICULTURE
Silage products
Greenhouse films
Field covers
Peat & compost 
Animal feed
Fertiliser
Report by Directors & Business Review 03
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 3 TRANSPORTING
CLIENT STORY
Bulk supplies of empty bottles arrive 
at A&S Packaging in Dumbarton 
to be filled with whisky.
Many of our products are used in transit packaging 
where their primary function is to stabilise loads for 
safe transportation. 
Our pallet covers have to be light, but very strong to
ensure that heavy and potentially dangerous loads, 
such as bottles and building materials, are moved 
around cleanly and securely without being damaged 
or causing injury. 
04 Report by Directors & Business Review
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 4 Over the last few years the introduction of new
polymer technology and extrusion equipment has
resulted in significant reductions in film thickness
across all traditional pallet protection films. This,
coupled with the development of stretch hood film
as a replacement for traditional shrink films, means
that end users can reduce their film usage by as
much as 30% whilst also eliminating the energy
required to shrink the film.
Much of the used pallet protection film is collected
and baled at distribution centres and other points
along the delivery chain. BPI takes back over 35,000
tonnes per annum for recycling and conversion into
other film products.
REDUCE, RE-USE, RECYCLE
Report by Directors & Business Review 05
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 5 CHAIRMAN’S STATEMENT
06 Report by Directors & Business Review
We indicated in our Pre-Close Trading Statement 
in December that our results for 2006 would be 
in line with our expectations at that time. In the 
event, the outcome was at the upper end of these
expectations and I am pleased to report that,
although our results fell short of the excellent
outcome in 2005, they exceeded the performance 
of each of the preceding three years. In light of 
the challenges which 2006 presented, we have 
to regard this as a satisfactory outcome.
RESULTS
On sales of £414 million (2005 – £410 million), our
operating profit declined to £17.1 million (2005 –
£23.3 million), reflecting reductions in volumes and
margins in our UK-based business during the year.
After a decrease in net financing costs to £3.1 million
(2005 – £3.6 million), the profit before tax was 
£14.0 million (2005 – £19.7 million). Diluted earnings
per share fell to 38.46 pence (2005 – 54.28 pence). 
DIVIDEND
The Board is recommending a maintained final 
dividend of 15 pence per share for the year ended
31 December 2006 (2005 – 15 pence), giving a 
total for the year of 22 pence (2005 – 22 pence).
If approved by shareholders, the recommended 
final dividend is payable on 11 May 2006 to
shareholders on the register at the close of 
business on 16 March 2007. 
CASH FLOW & BORROWINGS
Our net borrowings increased slightly to £52.0 million
(2005 – £47.1 million) as at 31 December 2006.
Working capital has increased due to a higher level
of stockbuild for the 2007 silage season. We also paid
additional pension fund contributions of £3.5 million 
in December, as part of a package of measures
designed to address the scheme deficit.
Interest cover on bank borrowings was very sound 
at over six times. Deferment of certain capital projects
and late delivery of equipment reduced our spend 
on fixed assets to £12.5 million (2005 – £14.3 million).
We currently envisage a return to higher levels of
capital expenditure in 2007. 
GROUP PENSION SCHEME
Following extensive consultation with members of 
the scheme, the Group has now modified the future
benefits accrued by members as part of a package 
to reduce the current deficit in the scheme. 
As previously commented on in the interim statement,
the Group has agreed to inject an additional cash
contribution of £20 million, on a tax efficient basis,
over the next five years. As I indicated above, some
£3.5 million of these additional contributions were
paid at the end of 2006.
At the year end, the gross deficit in the scheme stood
at £33 million (2005 – £54 million). We believe that
we have embarked on a course to reduce the deficit
significantly in the foreseeable future and to create
greater certainty for both scheme members and
other stakeholders in the Group.
I am pleased to report that, although our
results fell short of the excellent outcome
in 2005, they exceeded the performance
of each of the preceding three years. 
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 6 Report by Directors & Business Review 07
REGULATORY MATTERS & THE ENVIRONMENT 
We announced on 30 June that the European
Commission had decided to close its files on the 
original investigation into anti-competitive activities 
in Industrial Films. This excellent news ended many
years of uncertainty. It is gratifying that our full and
early co-operation with the EC, during both this 
investigation and the investigation on Industrial Bags,
was reflected in the final outcome. 
We continue to ensure that we remain 
compliant with all competition legislation 
and all relevant employees are made fully 
aware of the consequences of failure 
to comply on a regular basis.
As we indicated last year, certain European polythene
bag producers have complained to the European
Commission regarding product allegedly being
dumped on the European market by producers in 
the Peoples Republic of China (PRC). In October, the
Commission imposed an additional tariff of 8.2% on
certain polythene bags imported from the PRC. By
31 December 2006, we had already paid a tariff of
£0.1 million and our estimate going forward is for
an annual tariff of £0.4 million on bags which we
manufacture in Xinhui and import into the United
Kingdom. We have already incurred legal costs of 
£0.2 million in making representations to the EC
regarding the proceedings used in assessing this 
tariff and its relevance to our PRC operation. 
We may incur further considerable sums in legal 
fees as this tariff will have a significant effect on 
our expansion plans for our Xinhui operation 
and we are certain that its basis is flawed.
After considerable legal expense and management
time, we are pleased to note the demise of the
Environmental Levy on Plastic Bags (Scotland) Bill.
This Bill fizzled out after it became clear to all involved
in the process that the environmental gains envisaged
under the legislation were actually negative. This is 
a similar conclusion to previous serious studies on
this topic and it is sad to note that in Ireland, where
legislation has led to a reduction in carrier bags given
out by retailers, overall levels of packaging waste have
increased as retailers attempt to cope with the issues
of unavailability of in-store secondary packaging. 
We may now be faced with a repeat performance as
certain UK politicians seek to gain electoral advantage
without really understanding this complex issue. 
It would be heartening if they were prepared to
examine the evidence provided both by our industry
and independent experts. 
It is also clear that the packaging industry, in general, 
is under attack particularly from the media for so
called excess packaging on retail goods. Having spent
some 37 years listening to comments from our
customers on the need to have adequate packaging
to prevent loss or damage to their goods en-route to
the final customers, I wonder if these complainants
are looking through the right end of the telescope. 
Packaging in the Western World enables food 
to reach customers with less than 2% wastage 
compared to over 50% in certain undeveloped 
markets with no packaging. Typically the contents of
modern packaging consume more than 10 times the
energy in their production than the packaging itself, 
so even a 10% decrease in food wastage using 
modern packaging is environmentally cost neutral.
Where packaging is preventing waste, then that
avoided waste must be added into the environmental
equation. The current debate needs to be balanced 
by greater scientific and informed comment. 
Much evidence is available, but unfortunately, 
this does not sell newspapers. 
The scarcity of polythene scrap available for recycling
in the UK is becoming increasingly evident. This
scarcity has affected the UK more than other EC
countries, as the export of scrap for recycling is 
considered to satisfy the obligations of the Packaging
Waste Directive and counts under the UK system as 
qualifying for the issue of a Packaging Recovery Note
(PRN). This had led to a collapse in the value of PRNs;
previously a useful source of revenue for UK 
recyclers. Inevitably, this will lead to a subsequent
reduction in recycling capacity in the UK, as can 
be evidenced by the department closures we
announced at Greenock and Stockton earlier 
this year. 
Our number of accredited recycling sites has reduced
from seven at the start of the PRN system to only
three now. Although the global market price is similar
in all countries, the lack of an obligation to recycle
scrap arising in the UK within the EC has fuelled 
the UK export trade to the Far East. This is distinctly
unfavourable when compared with schemes operating
in other countries within the EC which have been
devised to promote the recycling of scrap locally. 
As a direct consequence, a thriving recycling sector
has developed in several member states under the
aegis of the Packaging Waste Directive. With the UK
public increasingly demanding action on the recycling
of waste packaging, the UK government would do
well to re-examine the UK system and modify it to
promote increased recycling of waste within the UK. 
In 2001, UK recyclers handled around three-
quarters of UK plastic waste arisings; in 2006,
over two thirds were exported to the Far East.
Container loads of UK plastic waste sailing to 
the Far East can only lead to container loads of 
recycled plastic products sailing back to the EC,
making a nonsense of the environmental logic
behind the EC Packaging Waste Directive.
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 7 GROUP DEVELOPMENT & STRATEGY
Despite negotiations with several parties, we did not
conclude any acquisitions during 2006, due on each
occasion to price. All had recorded excellent results
in 2005 and wished to base exit valuations on these
results. In many cases even higher numbers were
projected for 2006 and beyond. Whilst we can
empathise with projections based on an upward trend
from 2004, it became clear during 2006 that our
industry’s results for 2005 were achieved against 
an unusually favourable background. We remain
vigilant for acquisition opportunities, but we are aware
of what results can be achieved in our industry and
what we are prepared to pay.
Our organic growth on the European Mainland 
and the Peoples Republic of China continues at an
increasing pace. These areas are where we see the
greatest opportunities and where, as a consequence,
we are spending a proportionally higher percentage
of our capital expenditure. 
In the UK, we continue to have the issues of
overcapacity and enthusiastic pricing by loss-making
competitors and some loss of business as customers
relocate or source overseas. As a result, we have had
to re-assess our capacities and we have announced
several closures and internal redistribution of
capacities since the end of the year.
On 16 January, we announced the closure of our 
loss-making film extrusion operation at Scunthorpe. 
On 9 January, we entered negotiations with the
workforce at our Stockton Refuse Sacks business
with a view to relocating that capacity to our site 
at Heanor. 
On 23 January, we announced the closure of our
Recycling Department at Greenock and the cessation
of the production, from recycled materials, of plastic
pallets and geoblock, our plastic reinforcement block
for grass and similar surfaces.
These latter two closures were driven by the
increasing price and lack of availability of scrap
polythene in the UK as volumes of export scrap
continue apace to low labour cost economies 
in the Far East.
The total costs of closure will be around £1.5 million
and should have a minimal impact on our 2007 results.
OUR PEOPLE
The number of people employed by the Group 
at the year end fell to 2,840 compared to the 
3,000 employed at the end of 2005. The numbers 
will fall again in 2007, after the closures announced
early this year.
I am pleased to report that we will have recorded
a further improvement in our reported accident
statistics with a record low number of lost 
time accidents.
TRADING FOR 2006 & 
PROSPECTS FOR 2007
Writing at this time last year, I indicated that our
objective for 2006 was to maintain and hopefully
improve on our performance for 2005. However, 
as we reported at the time of the interim statement,
despite a good first quarter, it became clear during
the summer and early autumn that 2006 was not
going to go as well as 2005. There were a number 
of reasons for this, all related to market conditions.
Firstly, the abnormally fine weather we experienced 
in the summer months, following a cold spring, had 
a significant effect on volumes of silage and therefore
the demand for silage stretchwrap. Farmers 
experienced low yields with their first silage cuts 
and in the summer many ended up making hay.
Secondly, we continued to note attrition in sales 
of industrial products in the UK. In addition to 
furnishings, which continue to be affected by imports,
we saw a downturn in many construction related
industries. Horticultural sales, affected by the cold
spring, did not recover during the summer months.
Thirdly, as outlined earlier in this statement, margins 
in our recycling operations came under great 
pressure as their basic raw material, scrap polythene
film and bags, became both more expensive and
scarce due to demand from the Far East. 
Fourthly, we were faced with an unprecedented
increase in energy costs during the year. Year-on-year
these costs increased by some £4 million, and although
we did manage to pass through some of this increase
to our customers, market conditions did not permit
us to pass on all of it. 
The above four factors were mainly responsible for
the significant reduction in our UK operating profits 
in 2006. Our European business was slightly affected
by the silage and energy issues, but produced improved
results in a less difficult trading environment.
2007 is a different year for silage and we have to hope
that growing conditions return to a more normal
pattern. We have additional high-quality capacity
compared to last season and we are well positioned
to service this market which exhibits a growing trend 
as demand for organic feed increases. Further
investment in silage stretchwrap production 
is planned for the end of 2007.
08 Report by Directors & Business Review
Our objective this year is to improve on the result
for 2006. We have made a reasonable start and
have put in place certain steps to improve our 
performance in the UK. It is far too early to make
any predictions, but we do feel that the business is
on a sound footing and has the potential to deliver
a better performance in 2007. 
CHAIRMAN’S STATEMENT
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 8 We have already taken steps to rationalise our overall
UK capacity and we will take further action if the
market does not improve. We are very aware that
some trends may be temporary and that we have
a customer base that demands service, as and 
when required. However, the retention of currently 
under-utilised capacity has to be balanced against
producing a return for shareholders and generating
sufficient cash to re-invest in the new and improved
products which our customer base demands.
Raw material prices had a significant impact on our
2006 results. We indicated at the time of our Interim
Results that prices were rising. These increases were
viewed by our industry as transient and selling prices
failed to reflect input costs in September and October.
Raw material prices did fall back late in the year and
margins recovered. In January, we were faced with 
a re-run of September although we detected less
enthusiasm from our suppliers as they were
benefiting from reduced feedstock costs as oil
reduced in price. This sentiment changed towards 
the end of January and, as their costs increased again
and feedstock prices started to look more realistic,
suppliers insisted on increased prices for February.
Attempts at developing a futures market in plastics by
the London Metal Exchange are floundering on their
insistence on equating to metals and running a
physical market. This type of approach does not lend
itself to a commodity market when the commodity 
is actually hundreds, if not thousands, of grades of
product and not simply one commodity. Our industry
is unlikely to find a remedy to price fluctuations until 
a more flexible futures market has evolved. The
proposed introduction of spot prices and local
contracts may provide some increased liquidity,
but the link to the physical market and a limited 
range of product grades remains. 
In short, we continue to have months where margins
are affected by the seldom random actions of our
suppliers and the reaction thereto by competitors
trying to guess the direction of the next movement.
This is unlikely to change, but I believe that we handle
this well and I see no evidence that any of our 
competitors do any better.
Our objective this year is to improve on the result for
2006. We have made a reasonable start and have put
in place certain steps to improve our performance 
in the UK. It is far too early to make any predictions,
but we do feel that the business is on a sound footing
and has the potential to deliver a better performance
in 2007. 
CAMERON McLATCHIE
CHAIRMAN
5 MARCH 2007
Report by Directors & Business Review 09
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 9 MARKET OVERVIEW
The European polythene film extrusion market is
estimated at over 7 million tonnes and is highly
fragmented with no individual business having more
than 5% of the market. The market is characterised 
by strong regional players and a number of specialists.
Major end use applications include the protection
of goods in transit including stretchfilm, collation
shrinkwrap and pallet shinkwrap. Bags and sacks are
a major area with a wide variety of uses from small
coin bags to carrier bags to heavy duty sacks for
chemicals and agricultural feed. Non-packaging 
uses for polythene films are primarily in building and
agricultural applications including damp proofing
and film used for silage and mulch wrap and
greenhouse films.
The nature of the polythene film industry is such that
a significant proportion is manufactured as film on the
reel which is then sold to converters for a wide variety 
of other applications.
Polymer, the main raw material, is produced as a
downstream product from the oil industry with the
main suppliers being the large multi-national oil and
chemical companies. Raw material prices have always
been volatile due to supply and demand and the
influence of oil and ethylene prices. Increases in 
oil and ethylene prices, combined with increasing
demand from the Far East, particularly China,
contributed to a rising polymer price which peaked 
in October 2005. The average polymer price per
annum has increased every year since 2002 reaching
a peak in 2006. Substantial investment is being made
in the Middle East, including Iran, and significant
additional capacity will come on stream from 2008
onwards. A new LD plant in the UK will be
commissioned towards the end of 2007.
A recycling industry has developed with over 
700,000 tonnes of material recycled for use by 
the film extrusion industry. 
Polythene films have been highly successful in
substituting other materials. The industry is now
reaching a degree of maturity and recent years have
been challenging with growth rates now averaging
less than 2% per annum. Rising raw material costs,
increased imports and price pressure from customers
have all conspired to put pressure on margins.
Recent growth in the UK has been even lower at just
over 1% as we continue to see increased levels of
imports. Poor demand throughout 2006 resulted in
very competitive trading conditions and businesses
took volume at marginal prices to fill capacity.
The markets in Mainland Europe and the UK both
have over capacity which requires rationalisation 
and consolidation to remove this excess capacity.
The industry operates in a very competitive market
with volatility of raw material prices resulting in margin
squeeze at the peak of the raw material cycle.
Raw material prices have climbed relentlessly since 2002
creating extreme margin pressure as customers, used
to reducing prices, were reluctant to accept price
increases. During 2006, raw material prices moved 
up continuously until September before dipping at
the end of the year.
UK producers also had to operate with significantly
higher energy costs which increased to a much higher
level than in Europe. 
60
50
40
30
20
10
0
2002 2006 2005 2004 2003
70
OIL PRICES: 
Five year comparison ($/barrel)
900
800
700
600
500
400
300
2002 2006 2005 2004 2003
POLYMER PRICES: 
Five year comparison (£/tonne)
900
800
700
600
500
400
300
2002 2006 2005 2004 2003
836 790 678 541 490
AVERAGE POLYMER PRICES: 
Five year comparison (£/tonne)
10 Report by Directors & Business Review
Raw material prices have climbed relentlessly 
since 2002 creating extreme margin pressure as 
customers, used to reducing prices, were reluctant
to accept price increases. During 2006, raw material
prices moved up continuously until September
before dipping at the end of the year.
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 10 STRATEGY RISK FACTORS
Report by Directors & Business Review 11
Our strategy for the business remains unchanged 
in that we are a focused polythene film and 
bag business. 
Our primary objective is to grow operating profits 
and earnings per share.
We aim to provide first-class customer service by 
delivering high-quality products at competitive prices.
We aim to be number 1 or number 2 in the major
markets in which we operate. 
We aim to achieve organic growth in product areas 
and market sectors that continue to develop.
We will invest in modern manufacturing equipment 
to enable us to develop new products and meet our 
customers ever changing requirements.
We intend to develop our European and Chinese 
operations.
We see further growth opportunities in agricultural 
markets and recycling.
Other objectives include a continual improvement 
in our operational performance and a continuing
reduction in our cost base to ensure we remain 
competitive.
Acquisition opportunities will be considered 
but will only be completed at the right price.
We firmly believe that the prevention of accidents
involving personal injury is essential to the successful
operation of our business and we regard the health 
and safety of our employees as paramount.
As a leading manufacturer and supplier of polythene,
we recognise our responsibility to operate with due
concern for the environment in which we live and 
work and to minimise the impact of our activities 
on that environment.
We recognise that our people continue to be central 
to the development of the business.
BPI may be affected by a number of risks, not all 
of which are within our control. Outlined below is 
a description of some of the factors that may affect
our business. Other factors, in addition to those listed
below, may also adversely affect the Group. The
process that BPI has in place for managing these 
risks is described in the Corporate Governance Report
on page 34.
The following section contains our perception of 
particularly important risks and uncertainties facing 
the Group:
Raw Material Prices.The Group’s main raw material,
polymer, is subject to extreme volatility due to
fluctuating prices for ethylene and, to a lesser extent,
oil. Supplier actions can also influence prices due
to maintenance periods and breakdowns at their
production plants.
Energy Costs. As a process business and a significant
user of energy, our results can be affected by major 
price movements.
Perceived Environmental Issues. While polythene
film is the most lightweight durable packaging 
medium, perceptions continue to exist that it is 
environmentally unfriendly and, together with
adverse comments on plastic and packaging, 
could lead to changes in customer preference.
Adverse Weather Conditions. A number of our 
products are dependent on seasonal weather
conditions and adverse weather conditions could 
lead to reduced volumes.
Regulation. Our business is subject to regulation 
in many countries and this can impact on our
performance as we have seen recently with the
European Commission Anti-Dumping Duties.
Poor Economic Conditions. Most of the Group’s 
revenues are derived from the UK, Ireland, Belgium
and Holland and are, therefore, sensitive to
these economies.
Foreign Exchange Risk. As we operate in several 
non-UK countries, have considerable exports 
from the UK and our main competitors are based 
in Europe, we are exposed to medium-term
movements in exchange rates, particularly 
the Euro and the US dollar.
GEOGRAPHICAL
66% 22% 10% 2%
UK to UK EUROPE to UK to OTHER
EUROPE EUROPE
PROCESS
18% 43% 39%
RECYCLED CONVERTED FILM
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 11 CLIENT STORY
Our film is used by Emmett UK and
other growers to wrap fresh spinach
for major retailers like Tesco.
WRAPPING
Some, but not all, of our products are classified 
as packaging. Even when packaging is the primary
function, our products can also protect and 
preserve the goods that they wrap. 
This is particularly true of fresh produce where 
specialist packaging can protect the product in transit
and extend shelf life to minimise food wastage and
distribution costs.
12 Report by Directors & Business Review
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 12 Using BPI’s advanced range of stronger and thinner
films, major retailers have moved from a lidded
punnet to modified atmosphere packaging in a 
vertical form film seal bag, enabling a significant
reduction in the volume of packaging. 
Many consumers re-use food packaging to carry
other items or collect kitchen waste.
Our films are recyclable but, unfortunately, there are
no large-scale collection schemes to recover used
plastic film from households. However, our new
generation of compostable films ensure the
removal of the product from the waste stream,
either by home composting or, if available, other
local composting solutions.
REDUCE, RE-USE, RECYCLE
Report by Directors & Business Review 13
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 13 CHIEF EXECUTIVE’S REVIEW
BUSINESS OVERVIEW
SUMMARY
Our performance in 2006 fell back from our 
excellent performance in 2005 as our UK business
suffered from lower volumes in certain sectors,
higher polymer, energy and scrap prices and reduced
scrap availability.
RAW MATERIAL PRICES
Raw material price volatility continued in 2006 with
the price rising throughout the year and peaking in
September/October before falling towards the end 
of the year. The average LD Platts price increased 
by over 5% to a record average for a calendar year,
although spot prices did not quite reach the all-time
record sterling high achieved in October 2005. 
SALES VOLUMES
Our total volume sales fell to 309,000 tonnes as 
we experienced reduced demand in certain sectors
which led to a very competitive market as some 
competitors desperately sought volume to fill 
capacity. The continuing high raw material prices
encouraged more down gauging and many products
continued to get thinner reducing volumes by around
5,000 tonnes. Where we were unable to achieve
increased selling prices to recover our raw material
and energy costs, we exited this poorly returning
business. Adverse weather conditions reduced grass
yields throughout Europe and led to reduced
volumes in silage.
RESTRUCTURING
During the year, in our small trading business, we
closed our sales office at Birkenhead and transferred
production from Norwich to other Group sites.
Closure costs of £0.3 million were offset by a gain 
on sale of a vacant property of £0.5 million. 
In January 2007, we announced the closure of our 
loss-making site at Scunthorpe, the closure of refuse
sack manufacture at Stockton as we consolidated 
manufacturing at Heanor and the closure of recycling
at Greenock as we consolidated at Heanor and
Dumfries. Total job losses will be around 90 with 
10 jobs created elsewhere. Total closure costs 
will be around £1.5 million and the cost savings
should start from April onwards.
CAPITAL EXPENDITURE
Total capital expenditure at £12 million was just 
below depreciation as we continue to invest for new
products, additional capacity for growth products,
product differentiation and production efficiencies.
In Europe, at our plant in Zele, Belgium, we replaced
an older printing press with a new eight-colour 
printing press to increase capacity and improve 
efficiency. At Roeselare, Belgium, we converted a line 
to produce stretch hoods, a growing product, and
installed a pre stretch machine for new products.
In China, we completed the extension of our 
factory and installed new extrusion, printing and
conversion equipment.
In the UK, we increased capacity at our recycling 
plant for agricultural waste in Dumfries and installed 
a further eight-colour printing press at our Consumer
business at Worcester.
SENIOR MANAGEMENT
John Smith, Managing Director of our Consumer
business, will retire on 31 March after serving the
packaging industry for 49 years. John joined the
Group in 1990 and has been responsible for 
developing our VMB consumer business at Worcester
into one of the UK’s largest suppliers of printed 
wicketted polythene bags to the fresh produce and
bread markets. We thank John for his contribution 
to the growth of the Group and wish him well in 
his retirement.
OUTLOOK
The new year has started on a satisfactory basis
despite some small increases in polymer prices and
continued poor demand in certain sectors. We are
hopeful of a better year for our agricultural and silage
products and have again taken steps to reduce our
cost base. We remain well positioned to improve our
performance over 2006. 
14 Report by Directors & Business Review
Our performance in 2006 fell back from our 
excellent performance in 2005 as our UK business
suffered from lower volumes in certain sectors,
higher polymer, energy and scrap prices and reduced
scrap availability.
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 14 OPERATING REVIEW
EUROPE
Our European business comprises two manufacturing
sites in Belgium, one site in the Netherlands and a
sales operation in France. The business specialises in
the manufacture and sale of high-quality printed film
for the food industry, form fill and seal films (FFS) and
heavy duty sacks for the chemical, construction, 
horticulture and fertiliser industries, general industrial
films and silage and packaging stretchwrap.
Volumes, despite some down gauging, increased by
2,100 tonnes which combined with an improved sales
mix and good control over operating costs resulted 
in an increased operating profit.
FILM PRODUCTS
Europe produces a range of film on the reel products
which are supplied to a wide variety of markets.
Volume sales of silage stretch including our market
leading brand, “Silotite”, increased by over 4% despite
the adverse weather conditions which produced less
grass during the critical growing season. Our leading
brands are sold throughout Europe and we have well
established positions in most countries and are 
seeing increased demand from Eastern Europe. 
We have now developed “Baletite”, a potential 
replacement for netting in the silage baling process
and, while sales were modest in 2006, we anticipate
higher sales in 2007.
Volume sales in Industrial Films were up 9% as 
we increased sales of our high-quality stretchfilm
“Bontite” and started production of stretch hoods 
following investment at Roeselare. 
CONVERTED PRODUCTS
Converted products include all our printed and
converted products which are supplied to a wide
range of markets. 
Printed film for the food industry increased by 9% 
as we expanded capacity by replacing an older press
and saw good demand from the frozen vegetable
market. Margins remained under pressure.
Industrial sales were broadly in line with 2006 with 
the reduction in bags being offset by increased 
volumes in FFS as the market continued to move 
to FFS.
At Hardenberg, our site in the Netherlands, we
strengthened our management team by appointing 
a new Operations Director with considerable 
manufacturing experience.
Report by Directors & Business Review 15
2006 2005 2004 
Operating Profit £7.4m £5.5m £4.3m
Tonnes Sold 59,400 57,300 56,000
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 15 16 Report by Directors & Business Review
UK & IRELAND
Our UK and Ireland business consists of our UK
manufacturing sites and sales offices in the UK and
Ireland. It also includes our plant in China as most
of its production is sold in the UK.
Our operating profits fell as sales volumes reduced
due to lower demand and very competitive markets
and we experienced increases in energy, polymer and
scrap prices. Our UK electricity prices doubled in late
2005 and we incurred an additional £4 million of
electricity costs in 2006. These costs proved very 
difficult to recover in total, especially in markets
where the competition was European and our
European competitors did not experience this 
significant level of increase. The high level of scrap
exported to the Far East pushed up scrap prices and
reduced availability.
Demand in certain sectors including some sectors of
the construction industry, DIY, horticulture, bedding,
furniture and general packing remained poor. In other
sectors, including packaging stretchwrap, competition
was intense and we did not pursue volume at
uncompetitive margins. Adverse weather conditions
reduced the demand for silage stretchwrap.
FILM PRODUCTS
Film products include a range of film on the reel
products for a variety of markets.
Sales of collation shrink films, which are mainly to the
food and drinks industries, were broadly in line with
2005 after taking down gauging into account.
Competition remained intense with margins under
constant pressure. Volumes in printed collation shrink
were disappointingly below 2005 as new capacity
from competitors was brought on stream and
margins reduced.
Sales to the converter sector were down slightly 
more than the down gauging effect as we saw a
much quieter last quarter. Some business was lost 
as customers moved production to Eastern Europe.
New products for heat lamination and surface
protection were introduced and have been well
received in the market.
Our total sales of industrial packaging stretchwrap
were over 5% down on 2005 as nonsensical pricing
from competitors necessitated walking away from
some business. Cast PSW volumes were in line with
2005 as we again sold our capacity, but intense
European competition put pressure on margins. 
Sales of blown PSW were over 10% down as we
lost market share to unsustainable pricing from
competitors who offered products that might
not equate with our quality registered products.
Machinery for the production of new pre stretch 
and coreless products has been ordered for delivery
in February which will enable us to offer higher 
added value products.
Sales of silage stretchwrap fell by 10% due to poor
weather conditions throughout Northern Europe
where the grass yield is believed to be down by
around 15%. We hope that 2007 will be a normal year
and have authorised further capital expenditure to
improve efficiencies and reduce operating costs.
Sales in our specialist agricultural and horticultural
products were disappointingly only 4% ahead of
2005, despite our additional capacity, as sales of field
covering film in the UK were down. We expect to see
some recovery of field covering in the UK and plans
are well developed to increase exports of our
horticultural products.
In January, we announced the closure of our loss-
making film site at Scunthorpe and the volume 
will be transferred to our other film sites that have
available capacity.
CHIEF EXECUTIVE’S REVIEW
The new year has started on a satisfactory basis
despite some small increases in polymer prices and
continued poor demand in certain sectors. We are
hopeful of a better year for our agricultural and silage
products and have again taken steps to reduce our
cost base. We remain well positioned to improve our
performance over 2006. 
2006 2005 2004 
Operating Profit £9.7m £17.8m £9.5m
Tonnes Sold 249,900 266,200 277,000
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 16 Report by Directors & Business Review 17
RECYCLED PRODUCTS
We are the leading recycler of polythene films in the
UK with an annual recycling capacity of nearly 70,000
tonnes. We recycle scrap from our own operations,
used products taken back from customers and scrap
purchased in the open market. We are also able to
recycle the more heavily contaminated scrap
including agricultural films. Recycled material is used
in the manufacture of construction films including
damp proof course, refuse sacks and rigid products.
Our recycling activities suffered badly from higher
energy costs as electricity is used in both the
recycling and extrusion processes. The business also
suffered from higher scrap costs, reduced scrap
availability due to the high levels of export to the
Far East and the collapse in the value of Packaging
Recovery Notes. Our recycling volumes fell by 6% 
due to the reduced scrap availability. In January, we
announced the closure of recycling at Greenock and
consolidated this activity at Heanor and Dumfries. 
Construction volumes were in line with 2005 with
growth at the larger builders’ merchants and in damp
proof course. Our specification sales business
continued to perform extremely well with sales
up 50% to £7.3 million.
Sales of refuse sacks were down 4% with down
gauging accounting for 1%. The rest of the reduction
was mainly in low margin business that we were not
prepared to continue to service unless we received
the appropriate price increase. We have announced
the closure of refuse sack manufacture at Stockton
and consolidated bag on the roll production
at Heanor.
During the year we invested £2 million to increase
capacity at our farm plastics recycling plant in Dumfries.
The new plant has now been commissioned and will
be fully operational for 2007.
Our building extension at Xinhui in China was
completed and we have now installed new high-
quality extrusion, eight-colour printing and high-
speed conversion equipment. The imposition of an
anti-dumping duty of 8.2% on certain products from
China to Europe is a setback for our Chinese plant 
but we remain confident that we will find other
markets, if necessary, to fill the plant. 
CONVERTED PRODUCTS
Converted Products comprise all our print and 
conversion plants and serve a wide range of markets
from Industrial to Consumer.
Overall sales of our industrial packaging were down
due to reduced demand from our customers.
Sales of horticultural products were similar to 2005, 
but showed no recovery from that poor year. 
Sales of construction products into the DIY market
again fell as the DIY sector continued to suffer from
poor demand.
Other construction sales, particularly into the brick and
block sector, were very depressed as our customers
continued to suffer from the high energy costs and
reduced demand.
Purchase of a tube forming unit for producing back
seam product for entry into the cement packaging
and other industries has been authorised. This opens
up cement packaging which is one of the last major
markets to convert to plastic sacks and we are talking
to all major potential users.
Sales volumes at our small manufacturing sites fell
15% as a number of larger customers went out of
business or moved manufacturing outside the UK. 
We also lost some volume as customers found lower
prices following our price increases at the end of
2005. These sites remain in a competitive market 
with over capacity and numerous small competitors.
Our sales team has been strengthened to enable us
to fill capacity, but only at sensible prices.
Consumer products had a good first half before
volumes dipped in Q3, but returned with a late
Christmas rush in Q4. Competition intensified during
the second half of the year with much business
changing hands albeit at lower margins. Major sales
continue to be in the fresh produce and bread
markets and overall sales moved ahead by 3%. 
A further eight-colour printing press was installed in
February which enabled us to meet our customers
growing requirements for higher-quality print.
Our pre-press and plate-making business installed 
a computer-to-plate imaging system to ensure it
remains technically competitive and to deliver 
consistent high-quality repro for our printing
operations. Sales outside the Group are now 
over 50% of total sales.
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 17 18 Report by Directors & Business Review
ENVIRONMENTAL REVIEW
ENVIRONMENTAL LEGISLATION
The collapse of plastic PRN prices during the year, 
as a result of continued over-supply, caused
difficulties for our recycling businesses. It is of
concern that 65% of the UK’s plastic recycling
obligation is now satisfied by export recycling 
activity, mainly in the Far East and India. This creates 
a poor climate for investment in the UK recycling
infrastructure and, more importantly, starves existing
UK capacity of waste plastic materials for recycling.
We welcome the recent tightening of regulations 
in the area of export waste which require exporters 
to demonstrate that recycling has taken place in
facilities which are “broadly equivalent” to the UK. 
FARM PLASTICS
In March 2006 DEFRA announced that the
Government had decided to implement statutory
Producer Responsibility regulations in respect of 
non-packaging farm plastics. We welcome this
announcement as we have consistently maintained,
since the collapse of the voluntary industry scheme,
Farm Films Producers’ Group, 10 years ago, that the
most efficient and lowest cost way to ensure the
recycling of plastics from farms was via a mandatory
national framework. We continue to work with the
DEFRA supported Business Resource Efficiency and
Waste (BREW) programme to develop best practice 
in which to provide a sustainable farm plastics 
collection and recovery network. We are also 
involved in the Advisory Group on Farm Plastics 
which is advising Government on the shape of the 
forthcoming Producer Responsibility regulations. 
ENVIRONMENTAL ISSUES
We have seen much evidence during 2006 of anti-
plastic packaging sentiment which is often based on 
a misunderstanding of the facts. There is now much
greater interest from customers and consumers in
packaging, plastics, recycling and degradable and 
bio-degradable products.
BPI has a long record of leadership in understanding
the sector’s environmental responsibilities and 
ensuring that our industry’s products and processes
deliver environmental solutions whilst meeting the
practical needs of customers, consumers and society.
In order to assist and develop the debate, we have
produced an environmental fact sheet which is 
produced in full on the following pages. The following
points require to be highlighted and understood.
The most lightweight durable packaging medium
is polythene film.
Technical advances have enabled the industry to
reduce the thickness of the film yet retain its strength
and therefore use significantly less raw material.
Plastic films can be recycled time and time again.
Plastics have an extremely high calorific value and
waste plastics could be used to produce energy.
The combination of good distribution systems and
lightweight and durable packaging helps to reduce
the spoilage rate on food to 2% in the developed
western world compared to 45 to 50% in developing
countries where little packaging is used.
DEGRADABLE, BIODEGRADABLE
AND COMPOSTABLE MATERIALS
A new range of products are being developed including
degradable, biodegradable and compostable material.
We are fully involved in developing these products for 
a range of customers. Sales volumes are still very small
and our total sales in 2006 were less than 1,000 tonnes.
Products produced include Starchies
®
garden sacks
which are made of corn starch GM free biopolymer
and will decompose when put into a compost heap
after being filled with organic waste.
We have also produced a range of produce bags from
renewable resources which should be disposed of for
industrial composting.
We have produced other products which use an 
additive to act as a trigger to degrade or embrittle 
the plastic.
The increasing use of degradable and biodegradable
plastics will have an impact on recycling and we 
have recently been required to issue guidelines 
on segregation and identification to our suppliers 
of scrap polythene materials. We are unable to add
these materials to our general feedstock for recycling
as we must avoid any contamination which would
impact on the new products we produce from 
recycled material. 
JOHN LANGLANDS
CHIEF EXECUTIVE
CHIEF EXECUTIVE’S REVIEW
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 18 Packaging reduction, recycling and biodegradable
plastics are of increasing interest to our customers
and the general public.
This fact sheet is designed to help guide and inform
that interest. It is underpinned by BPI’s long record 
of leadership in understanding the sector’s
environmental responsibilities and ensuring that
the industry’s products and processes deliver
environmental solutions whilst meeting the
practical needs of consumers and society.
REDUCTION
The most lightweight durable packaging medium 
is polythene film. This accounts for the huge growth
in its use over the last 40 years. More importantly,
polythene film can now provide the same high levels
of protection and packaging from significantly less
raw material.
Hence the following facts:
PLASTIC PACKAGING IS CONTINUALLY BEING
REDUCED AND MINIMISED. CARRIER BAGS 
ARE ONE THIRD OF THE THICKNESS THEY
WERE IN 1990 AND THE AVERAGE WEIGHT OF
STRETCH FILM USED TO WRAP A PALLET OF
GOODS IS NOW 350 GRAMMES COMPARED 
WITH 1,400 GRAMMES OF SHRINK FILM USED 
10 YEARS AGO.
Ten times as much energy goes into the production
of food and goods contained by packaging than goes
into the packaging itself.
– Plastic packaging accounts on average for 1% 
of the weight of food it protects.
– In the western world, lightweight and durable
packaging makes an important contribution 
to reducing spoilage rates to 2% before food
reaches the consumer compared with 45-50% in
developing countries where little packaging is used.
Higher spoilage rates are bad for the environment.
– A 2004 study in Canada showed that to replace
plastic packaging with alternative materials would
consume 582 million gigajoules more energy 
and create 43 million tonnes of additional CO2
emissions. The energy saved by using plastic was
equivalent to 101.3 million barrels of oil and the
amount of CO2 emissions saved was equivalent 
to running 12.3 million passenger cars each year.
BPI CONTINUOUSLY WORKS WITH ITS
CUSTOMERS TO MINIMISE THE WEIGHT OF 
ITS PRODUCTS AND THEIR PACKAGING. TODAY
OUR PRODUCTS HAVE REDUCED IN WEIGHT 
BY 5,000 TONNES PER ANNUM OVER LIKE-
FOR-LIKE VOLUMES FIVE YEARS AGO.
RE-USE
Plastic films are designed to do a specific job of
protection and containment with the lowest material
use possible. Their very lightweight nature generally
makes them less suitable for re-use. However the net
environmental benefits of developing minimum
material/high spec products easily exceed any
constraints imposed on their subsequent re-use.
– A notable exception to this is carrier bags.
According to DEFRA figures at least 80% of UK
households re-use carrier bags at least once.
RECYCLING
Plastic films, unlike paper, can be recycled time 
and time again.
– In the UK in 2005, 400,000 tonnes of its plastic
packaging (22%) was recycled. However 65% of 
this activity took place overseas, mainly in China 
and the Far East.
DEFRA has amended the packaging waste regulations
to ensure that this reprocessing must take place to
‘broadly equivalent’ standards to reprocessing in the
UK. However, many exporters of plastic waste are
unable to determine where their plastic is recycled
and cannot therefore guarantee that this activity
conforms to the necessary health and safety,
employment and social standards implied by the
‘broadly equivalent’ requirement. BPI recycles 
over 70,000 tonnes of plastic waste every year 
at its UK reprocessing plants including waste from
industrial, commercial, agricultural, automotive 
and domestic sources along with all of its own
process waste.
ENERGY FROM WASTE
BPI supports the concept of incinerating waste
plastics to produce energy from waste.
– Plastics have an extremely high calorific value and
are effectively ‘frozen fuels’ which can be released
into energy when burnt. Mixed plastics have an
energy content of 9,585 kWh/tonne which is 
four times as high as Municipal Solid Waste (MSW)
in general, twice as high as paper and newspaper,
37% higher than coal and only 11% -18% lower 
than natural gas and oil respectively.
BPI CONTINUOUSLY WORKS WITH ITS
CUSTOMERS TO MINIMISE THE WEIGHT 
OF ITS PRODUCTS AND THEIR PACKAGING.
TODAY OUR PRODUCTS HAVE REDUCED 
IN WEIGHT BY 5,000 TONNES PER ANNUM
OVER LIKE-FOR-LIKE VOLUMES FIVE
YEARS AGO.
ENVIRONMENTAL FACTS
Report by Directors & Business Review 19
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 19 PRESENTLY THE UK INCINERATES ONLY 9% OF
ITS MSW COMPARED WITH 54% IN DENMARK 
AND OVER 40% IN FRANCE. IF ALL MSW WERE
INCINERATED IN THE UK IT WOULD PROVIDE 
5% OF THE UK’S TOTAL DEMAND FOR ENERGY.
– Many food packaging plastics are either composite
structures of different plastics which cannot be
recycled together or are too highly contaminated
with food waste to be recyclable. In these
circumstances incineration in energy-from-waste
facilities is a far better environmental solution
than disposal.
BIODEGRADATION
Plastic films are often criticised because they are 
seen as disposable products which, once disposed 
of, do not biodegrade. However, recent advances 
in technology now allow the production of a range 
of plastic films which are degradable, biodegradable
or compostable.
In addition new developments in biopolymers 
have allowed the production of plastic films from
renewable resource materials such as corn. These
materials are also biodegradable and compostable.
BPI PROMOTES THE USE OF BIODEGRADABLE 
AND COMPOSTABLE PLASTIC PRODUCTS WHERE
THEY RESULT IN THE DIVERSION OF WASTE FROM
LANDFILL TO COMPOSTING, OR WHERE THEY 
ARE DESIGNED TO DECOMPOSE NATURALLY 
IN THE ENVIRONMENT IN WHICH THEY HAVE
BEEN USED, AS WITH PLASTIC MULCH FILMS 
AND CROP COVERS.
– Additives are now available to accelerate degradation
and biodegradation in ordinary plastics as are a
range of polymers which, by virtue of a shortened
polymeric molecular chain, are inherently
biodegradable or compostable.
Degradable plastics fragment and break down under
the influence of light and heat. Biodegradable plastics,
by contrast, decompose when they come into
contact with microbial activity. Degradable plastics
can eventually biodegrade in the right circumstances
once they have fragmented sufficiently to be capable
of being acted upon by microbial activity but they will
not do so as quickly as those materials termed
‘biodegradable’.
Whilst plastics can now easily be made to biodegrade,
in designing them to do so one has to consider 
a number of issues:
– The primary purpose of plastic films is to protect
and contain. They are designed to be durable
enough to do the job for which they were intended
without compromising the integrity of the product
they protect.
– Biodegradable plastics, in contrast, are primarily
designed to be controlled-life products. Their
breakdown is subject to exposure to light, heat 
and oxygen. Their shelf-life will vary according 
to the degree to which they are exposed to 
these conditions.
Making a packaging material biodegradable might
be perceived to solve a particular waste issue at the
end of its life. If, as a result, however, the product it is
designed to protect itself becomes wasted, both the
consequences for the environment and the financial
cost arising will be very much worse than would
otherwise have been the case.
– Biodegradable plastics could limit our ability to
recycle large volumes of plastic packaging.
BIODEGRADABLE PLASTICS ARE TECHNICALLY
RECYCLABLE BUT A RECYCLER WOULD NOT
WANT TO RECYCLE BIODEGRADABLE PLASTICS
INTO PRODUCTS SUCH AS BUILDING FILMS OR
PLASTIC WOOD-SUBSTITUTES WHICH WERE
INTENDED TO LAST.
This does not present a substantial problem where
the biodegradable plastic is either clearly recognisable
as such or exists in only a small proportion of the
waste stream. However if biodegradable plastics 
were to enter the waste stream for recycled materials
in any significant volume this could seriously
compromise our ability to recycle plastic into 
new products.
– Litter is often cited as a reason to make plastics
biodegradable.
Plastic bags account for only 0.06% of litter in the UK.
However it is clear that plastic bag pollution does
cause more serious problems in developing countries
and in these areas a biodegradable alternative 
could provide a significant solution to a waste
disposal problem.
– It is by no means certain that degradable or
biodegradable plastics will necessarily breakdown 
in landfill sites as these are typically starved of light,
heat and oxygen. There is plenty of evidence of
newsprint remaining legible when recovered from
landfill sites after 40 years.
– Where recovery via composting takes place,
biodegradation can be seen as an element of
recycling within the waste hierarchy. However,
simply because a product biodegrades should not
lead to its ‘disposal’ being elevated to an equivalent
level to ‘recycling’. Disposal of newsprint, either 
as litter or to landfill, is clearly not an acceptable
solution simply because the waste stream may
eventually biodegrade.
20 Report by Directors & Business Review
ENVIRONMENTAL FACTS
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 20 BIOPOLYMERS
BPI welcomes the new generation of biopolymers
(polymerised corn, maize and potato starch) as an
environmentally-sustainable alternative to fossil fuel-
based polymers. We anticipate that fossil fuel-based
plastics will continue to play a significant part in
packaging for many years to come. 
However we recognise that the cost of these plastics
will continue to rise and that renewable resource
materials may offer an important alternative to some
oil-based plastics over the medium-term.
Whilst this development is certainly welcome, it is
important to keep all the relevant environmental
factors in perspective.
– A true comparative analysis of all the environmental
factors arising should also take account of the
sustainability of the production (e.g. fertilisers,
pesticides, herbicides) transport (e.g. road fuel) and
processing of raw materials (corn, maize, potatoes).
The assumption that a plant-based substitute has
a zero footprint is erroneous.
– Polyethylene is made from naphtha gas, one 
of a number of by-products produced from the
petroleum refinery process when distilling crude oil.
Only 3% of the world’s supply of oil is used to
make plastic packaging whilst 90% is used to
produce fuel and to provide power for homes 
and industry. Furthermore, a large proportion of
that 3% used to make polythene, unlike that used
to make fuel or heating, can have a second use after
fulfilling its original purpose either through being
recycled or converted to energy-from-waste.
BPI’S ENVIRONMENTAL COMMITMENT, HOWEVER,
ANTICIPATES BIOPOLYMERS PLAYING AN
INCREASINGLY IMPORTANT ROLE ALONGSIDE
TRADITIONAL POLYMERS OVER THE NEXT FEW
YEARS FOR CERTAIN PACKAGING APPLICATIONS.
BPI IS CONFIDENT THAT THE CURRENT
LIMITATIONS ON THEIR TECHNICAL
PERFORMANCE AS WELL AS THEIR HIGH COST 
OF PRODUCTION WILL CERTAINLY BECOME 
LESS OF A CONSTRAINT AS GREATER DEMAND
DRIVES FURTHER DEVELOPMENT AND 
IMPROVED ECONOMIES OF SCALE.
WASTE
Plastic films, along with all packaging materials, are
often seen as wasteful as the perception is that they
are disposed of once they have completed their
original purpose to protect and contain. The reality 
is that many now are re-used or recycled. However
when and where they are finally disposed of should
be put in its proper context.
The total amount of plastic packaging in the
household waste bin is around 2.6% or 40 kgs/year 
of an average household’s annual waste volume 
of 1.6 tonnes.
– If all the carrier bags used in the UK every year 
were eliminated and were not replaced by any
other bag or additional food packaging, the saving
per household would be equivalent to two litres of 
oil per year. A similar saving could be achieved by
driving just over a mile less per month or switching
off a 100 watt light bulb for 45 minutes a day.
Report by Directors & Business Review 21
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 21 SO WHAT IS THE ANSWER?
Like many environmental issues, the right answers 
are often not simple whilst the simple answers often
lead to unintended consequences and greater
environmental problems. 
OUR PRODUCTS ALREADY PROVIDE SIGNIFICANT
ENVIRONMENTAL BENEFITS BY PRESERVING 
THE ITEMS THAT CONSUMERS NEED TO BUY
THROUGH MINIMUM RESOURCE – MAXIMUM
PROTECTION. 
However, our products are not in themselves what
consumers actually want. They are protecting what
consumers want against damage and spoilage. Once
our products have done that job, the consumer
throws them away and therefore sees them as a part
of a waste stream and therefore part of the ‘problem’.
The reality is the exact opposite. Our products 
have been specifically designed to be part of the
solution. By producing products from the most
lightweight and durable material capable of properly
protecting the goods that society and consumers
need, we are helping to protect the environment.
Without them, the damage to our environment from
unnecessary spoilage and wastage would be very
much worse.
Furthermore, many of our products can be re-used 
or recycled into new products after fulfilling their
primary purpose, bringing additional environmental
benefits. Where they cannot be recycled, most of our
products can be used to generate energy through
incineration – and some of those remaining may 
also be suitable for composting or biodegradation.
At the same time we recognise that as consumers 
we all want to do our ‘bit’ for the environment. 
BPI therefore supports any change in behaviour that
produces net environmental benefits, however
small. We encourage and facilitate initiatives that
reduce unnecessary packaging and promote
opportunities for re-use and recycling.
BPI is totally committed to helping the general public
and opinion-formers to understand the issues and to
retain a sense of perspective in the face of those who
see packaging as an easy populist target. The claim
that consumers don’t really need it is dangerously
misleading from an environmental perspective – 
the facts speak for themselves in countries where
inadequate packaging causes significant and
avoidable wastage. It also risks diverting attention
from the much greater challenges posed by our
society’s impact on our planet through consumption,
travel and energy use.
ENVIRONMENTAL FACTS
22 Report by Directors & Business Review
This fact sheet has been compiled by Andrew Green,
Managing Director of BPI Recycled Products and 
Group spokesman on environmental issues
(andrewgreen@bpipoly.com). Source material for the facts 
and figures quoted can be found at www.incpen.co.uk,
www.pifa.co.uk and www.bpf.co.uk/bpfissues/
sustainability.cfm.
The information on the Canadian study by the Environmental
and Plastics Industry Council in Canada can be found at
www.plastics.ca/epic. The information on energy-from-waste
can be found at www.massbalance.org.
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 22 KEY PERFORMANCE INDICATORS (KPI’S)
The Group has three main non-financial KPI’s. From 
a health and safety point of view, we measure lost
time accidents for each site and benchmark against
the rest of the Group and other manufacturing 
businesses. From an environmental and cost control
perspective, we measure electricity usage per tonne.
As a relatively labour intensive business, we also 
monitor absenteeism by site and for the Group 
as a whole.
HEALTH & SAFETY 
The Group’s policy on Health and Safety states:
“We firmly believe that the prevention of accidents
involving personal injury or damage to property is
essential to the successful operation of our business
and we regard the health and safety of our 
employees as paramount.
We, therefore, through this statement of intent, affirm
our commitment to achieving the highest possible
standard of health and safety for all our employees
and any others whose health and safety may be
affected by our work activities.
The Board of Directors:
– Accept their individual and collective responsibility 
in providing health and safety leadership.
– Will ensure that all business decisions reflect its 
health and safety intentions as set out in this 
statement.
– Will provide a working environment that is both safe
and which has the lowest possible risk to health.
– Will provide sufficient information, instruction, 
training and supervision to enable all employees to 
contribute to their own health and safety at work.
The Managing Director of each business through 
their reporting Directors is responsible for ensuring 
that suitable and sufficient organisation and 
arrangements are employed for achieving the 
defined objectives.
Health and Safety is as important an issue as all other
commercial considerations. No task is so important
that a person’s health or safety is put at risk. The
Board of Directors will, therefore, pursue this policy
with the utmost diligence. We do stress, however, 
the need for all of our employees to co-operate in 
our aim to provide a working environment that is 
safe and which has the lowest possible risk to health.
This is not simply because of our legal obligations, 
but because it is in all our interests that we should
work together to achieve this end.”
We are pleased to report that in 2006 there was a 
significant reduction in accidents in comparison with
the previous year. Lost Time Accidents (“LTA’s”)
reduced to the lowest ever level of 0.4 (2005: 0.8)
accidents/100,000 hours worked. There were 27
LTA’s in the year compared with 54 in 2005. Fourteen
manufacturing sites had no LTA’s in 2006 of which
five had none in the past three years. Minor injury
rates also reduced during the year to 7.6 (2005: 8.0)
accidents/100,000 hours which is again the lowest
we have ever achieved. 
The severity rate gives an indication of the how 
serious any accidents are, so it is good to report 
that the severity rate has also reduced. 
This improvement is the result of a strong 
commitment at all sites who are now seeing the 
benefits of increased investment in health and safety
over the past number of years. We regard safety as 
an integral part of good business management. The
Group continues to encourage and support this 
commitment through all parts of the organisation.
The reduction in accidents is partly due to the 
implementation of the BP “EYES” behavioural safety
programme which was introduced three years ago. 
This scheme involves all employees directly in health
and safety, encouraging everyone to be aware and 
to look out for each other. This programme has been
successful in identifying many potential risks, before
they result in accidents. 
In 2005 we won the Plastics Industry Health & Safety
Award and we have continued to work hard to reduce
accidents across all manufacturing sites. We were
again recognised in the 2006 awards and were
selected as finalists for our BP “EYES” programme.
2006 saw the introduction of a self auditing system to
ensure that each operating site formally reviews their
health and safety management systems on a
quarterly basis. This review is carried out by the Senior
Director at each site, and is independently audited 
by the Group Health & Safety Manager.
Throughout 2006, our operating sites have focused
on improving the standard of risk assessments and
safe operating procedures which are the foundation
of a good safety management system. Whenever
there are changes within our operations, including
the introduction of new machinery and new 
processes, we ensure that our risk assessments 
are updated and reviewed.
The Group continues to monitor and implement
changes in legislation, taking into account statutory
requirements and industry best practice. In 2006
these included Noise, Fire & Asbestos regulations.
In conjunction with our insurers two seminars were
held which focused on property risk management.
These were attended by all Site Directors, engineering
managers and safety advisers. Following this, 
significant improvements have been made at 
each location to prevent losses due to fire and 
natural hazards.
Absenteeism 
(%)
3.6
4.0
2005
3.5
2004
Lost time accidents
(accidents/100k hours)
0.4
0.8
2005
0.9
2004
Electricity
(kWh/tonne)
677
682
2005
682
2004
Operational KPI’s
CORPORATE SOCIAL RESPONSIBILITY REVIEW
Report by Directors & Business Review 23
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 23 24 Report by Directors & Business Review
ENERGY
2006 2005 2004 2003
CO2 output (kgs/tonne) 303 306 308 309
Electricity (kWh/tonne) 677 682 682 681 
Gas (kWh/tonne) 59.5 59.3 58.2 58.1 
Oil (kWh/tonne) 5.6 5.8 5.3 5.6 
Water (litres/tonne) 0.33 0.32 0.37 0.41
In calculating the CO2 output/tonne of production we
have used national average electricity CO2 emissions
for each country in which we manufacture, as
provided by the International Energy Agency.
Our UK electricity supplier for 2005 and 2006 has
confirmed that its CO2 emissions for electricity 
supply are substantially below the UK national
average as it uses a mixture of nuclear and coal 
generation. This would suggest a reduction of 77%
(2005: 74%) in the actual CO2 emissions associated
with our UK electricity use . This is not reflected in 
the above table which is based on national averages.
The adjusted CO2 output figure for 2006 would have
been 125 kgs/tonne (2005: 123).
Electricity usage/tonne of finished goods has
reduced despite the increasingly sophisticated print
requirements of our customers which adds energy 
for the same production volume. There is an on going
improvement programme in place to purchase more
efficient equipment and fit energy saving devices,
especially motors and compressors.
Thirteen of our UK sites, representing 83% of UK
electricity usage, were accepted into Climate Change
Agreements with the Department for Environment
Food and Rural Affairs. In order to remain in the
Agreement and secure abatement of the Climate
Change Levy they are under an obligation to achieve
agreed energy reductions.
Gas usage/tonne remained constant due to the need
to incinerate Volatile Organic Compounds (VOC’s)
which are used in our printing processes where water
based inks are not technically viable. Old oil heating
has been replaced by more efficient gas systems over
recent years. One of our continental European sites
continues to use oil and accounts for 75% of Group
usage in 2006.
Water re-circulating systems are used extensively to
provide cooling water and in wash-recycling systems.
Lost time accidents – Accidents that cause employees to be 
unavailable for normal duties for more than three consecutive days.
Minor accidents – All reported minor injuries/100,000 hours worked. Severity rate – Number of days lost as a result
of accidents/number of hours worked.
LTA frequency rate
Accidents/100,000 hrs worked
2006
7.6
2005 2004 2003 2002
8.0
9.2
10.8
9.1
Minor accident frequency rate
Minor accidents/100,000 hrs worked
2006 2005 2004 2003 2002
0.4
0.8
0.9
0.8 0.8
Severity rate
Number of days
2006 2005 2004
0.0 1 0
0.0 1 9
0.0 1 3
CORPORATE SOCIAL RESPONSIBILITY REVIEW
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 24 VOLATILE ORGANIC COMPOUND 
(VOC) EMISSIONS
Our large print sites are required to comply with 
IPPC (Integrated Pollution Prevention & Control of
Emissions) regulations in the handling and use of 
solvents which are a major factor in VOC emissions.
Five of our major print sites use VOC abatement 
techniques (the process of changing these 
potentially environmentally unfriendly substances
before controlled emissions into the atmosphere).
The remainder use water based inks to 
achieve compliance. 
VOC solvent purchases for our print sites were: 
In tonnes 2006 2005 2004
Non abated sites 144 287 335 
Abated sites 1,703 1,550 1,539
Total 1,847 1,837 1,874
Annual purchases of solvents increased marginally
due to increased print requirements from customers.
In July a regenerative oxidising unit was installed at
one of our largest sites. This investment reduced 
VOC emissions by 114 tonnes during the second 
half of 2006.
We continued to launder the cloth wipes used at 
our print sites and dispose of our waste solvents 
responsibly through third parties throughout the 
year. We estimate that a 110 tonnes of this waste 
was successfully recycled and was then utilised as
energy in the manufacture of construction materials.
Whilst we remain dependant on solvent-based 
inks for many of our current customers’ print
requirements, we will use water-based product 
where the application allows.
ENVIRONMENT
As a leading manufacturer and supplier of polythene
film and other products we recognise our 
responsibility to operate with due concern for 
the environment in which we live and work and 
to minimise the impact of our activities on that 
environment. Through close contact with national
governments and industry regulators we are at the
forefront of legislative developments. We continue 
to develop our processes and working practices to
meet, as a minimum standard, both our legal and
social obligations. We seek continually to improve 
our environmental performance by setting objectives 
and targets combined with clear management 
programmes and initiatives to minimise our impact
on the environment. Specifically we are committed to:
– manufacture all of our products to meet the 
relevant legislative standards in all the countries 
and regions in which we operate
– minimise the use of resources and to work 
with our customers to minimise their use of
resources through environmentally responsible
packaging systems
– promote the re-use, recycling and recovery of our
materials and to assist in this recovery wherever it
is practical and environmentally beneficial to do so 
– improve the environmental performance of our 
processes by reducing emissions and energy use, 
minimising waste and controlling noise
– be a responsible employer and a good neighbour
– provide suitable and unambiguous environmental 
information for our employees, customers and the 
local community 
– maintain leadership in the development 
of new products and processes using recycled
materials and support initiatives which benefit 
the environment.
RECYCLING AND PACKAGING 
WASTE LEGISLATION
We are the UK’s largest recycler of polythene films
reprocessing over 70,000 tonnes in 2006. Since the
Packaging Waste Regulations were introduced in the
UK we have invested £18m in state-of-the-art plastic
reprocessing equipment at our Environmental
Agency accredited sites. During 2006 we invested
£2m at our agricultural waste recycling plant in
Dumfries. This investment came on stream in August
and will double the plant’s capacity to 30,000 tonnes
of farm plastic recycling. All investments in recycling
have been targeted, not just at increasing recycling
volumes, but allowing the reprocessing of increasingly
contaminated and downgraded waste streams.
Through our washing plants at Dumfries, Heanor and
Rhymney and rigid product processes at Greenock
and Dumfries, we have worked with our film customers
to recycle waste, which had previously ended its life in
a landfill site, from a variety of commercial, industrial
and agricultural sources. The recyclate from these
activities is used to manufacture the Group’s award
winning ranges of 100% recycled refuse sacks,
building films, Plaswood decking, fencing and street
and garden furniture and the Geoblock ground
stabilisation system.
The Group’s Packaging Waste recovery and recycling
obligation for 2006 was 10,920 tonnes, a slight fall of
314 tonnes from the previous year. We continue to
discharge our obligations through membership of 
the national compliance scheme Valpak and satisfied
our plastic recycling obligation through our own
recycling plants. Our cost of compliance was broadly 
in line with 2005.
We are the UK’s largest recycler of polythene 
films reprocessing over 70,000 tonnes in 2006.
Since the Packaging Waste Regulations were
introduced in the UK we have invested £18m in
state-of-the-art plastic reprocessing equipment 
at our Environmental Agency accredited sites.
Report by Directors & Business Review 25
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 25 26 Report by Directors & Business Review
BIODEGRADABLE PLASTICS
BPI welcomes the recent advances made in 
the technical characteristics of biopolymers 
manufactured from renewable resources. 
However we caution that the most important 
and valuable environmental credential of plastic 
films is their ability to perform a packaging, 
industrial or agricultural requirement using 
the most lightweight materials available for 
the task. The integrity and resource efficiency 
of this primary purpose of protection 
is of far greater environmental impact 
than the speed at which the plastic will 
eventually biodegrade. 
BPI promotes the use of biodegradable  
polymers where:
– the material is manufactured from a biopolymer 
and a renewable resource
– the material, if manufactured from a synthetic
polymer such as polyester, is fully compostable 
to EN 13432/DIN V 54900 which specifies strict 
timescales for biodegradation to occur and tight 
ecotoxicity levels of the resulting compost
– the material can be recycled via home composting 
or large-scale composting schemes or, when used 
for horticulture or agriculture, can be composted 
back into the soil
– the material cannot find its way back into the plastic
recyclate waste stream and contaminate the existing
infrastructure for the mechanical recycling of plastic
films and bags.
BPI continues to support the waste hierarchy of
Reduce, Reuse, Recycle and biodegradation can 
only provide a valid element within that hierarchy
where the waste plastic can be effectively recycled 
via composting.
Where our customers request an oxo-degradable
alternative to the above materials which does not
conform to EN 13432/DIN V 54900 BPI will support
these initiatives where:
– the product will biodegrade sufficiently quickly to 
allow for recovery through composting schemes.
– the product will not find its way back into the plastic 
recyclate waste stream.
Above all our overriding commitment is to offer
biodegradable products to our customers only where
we can guarantee the integrity of our product.
EDUCATION
We are active in supporting education, working 
with schools, universities and other institutions. 
We operate a range of activities from providing advice
and resources for teaching as well as sponsorship 
of educational projects aimed at increasing the 
awareness of plastics, packaging and the environment.
During 2006 we continued to support the Schools
Starpack Design Awards and again partnered Valpak
in their prestigious European Youth Eco-Parliament
project which nominated 10 pupils from five schools
to represent Great Britain in debating environmental
issues, with a particular focus on waste and packaging,
at the Youth Eco-Parliament in Paris in October 2006. 
As part of a chemical industries education initiative,
bpi films hosted school tours at both the Widnes and
Bromborough sites. Designed to provide an overview
of polythene products, their applications and material
benefits, the tours were undertaken by senior
production personnel at each site. The tour presentation
explained the life cycle of polythene products from
basic raw materials through to manufacture, use and
ultimately the recycling process. The guided tours of
the factory areas allowed pupils to see the extrusion
process in action following which they were afforded
the opportunity to find out even more at a closing
questions and answers session.
We sponsored two teachers for the Polymer Study
Tour at four UK universities to raise their awareness 
of the link between plastics, chemistry, engineering
and design technology. The information gained by
the teachers creates a better awareness of plastics
which they are able to pass on to their pupils within
the school curriculum.
CHARITABLE SUPPORT
Charitable donations made during the year 
amounted to £54,000. No donations were given 
for political purposes.
In addition to our specific support for educational 
initiatives the Group supports a number of charities,
wildlife funds, ecological projects and other good
causes. Most of our businesses sent out electronic
Christmas cards, rather than traditional cards, and
donated the money saved to local charities.
Unclaimed dividends are donated to charity 
after a period of 12 years.
The Group encourages each site to donate a 
percentage of its turnover to local charities. The Group
also supports national and international charities
involved in relieving suffering. This support is in both
products donated and financial contributions.
CORPORATE SOCIAL RESPONSIBILITY REVIEW
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 26 EMPLOYMENT POLICIES
Our people continue to be central to the 
development of the business. We strive to 
reach the highest standards in all aspects of 
employment and health & safety policy and 
practice in our European and Chinese operations. 
Recruitment & Retention 
We operate an equal opportunities policy and recruit
people for any vacancies regardless of sex, colour,
religion, age or disability. We recruit graduates 
from universities and young workers as modern 
apprentices. We employ a large number of older
workers over the age of 50 and have fully complied
with recent age discrimination legislation. We
increased our Normal Retirement Age from age 60
to age 65 in 2006. Our retention rates continue to
improve with employee turnover at 21% (27% in
2005). 80% of all leavers during the year had less than
two years service. We, therefore, consistently retain
longer-serving, higher-skilled employees and we will
continue to endeavour to improve our performance
in this area in 2007 and beyond. The difficulty in
recruiting and retaining UK employees for certain
positions has led to an increase in the employment 
of Eastern European labour and we currently employ
over 150 Polish workers across many of our UK sites.
Disabled Employees
Applications for employment by disabled persons are
always fully considered, bearing in mind the aptitudes
of the applicant concerned. In the event of members
of staff becoming disabled, every effort is made 
to ensure that their employment with the Group 
continues and that appropriate training is arranged.
Training & Development
Our employees are amongst the most skilled in
the industry. We invest in a range of development
activities including NVQ’s, MBA’s, and support other
professional and technical training. Our Senior
Operations Managers and Directors will receive
training in 2007 that will concentrate on machinery,
product, polymer, resource management, system
utilisation and HR/employment law. Our capital
investment programme is supported by training 
in the use of new machinery. Seven sites have
achieved the Investors in People award.
Training in health & safety (in conjunction with the
trade unions) is a particular Group strength. We
increasingly appraise our workforce annually in order
to identify their training needs. Members of the Group
Personnel Department regularly train our managers
and supervisors in a variety of employment matters to
ensure best practice people management is carried
out. The Group Health & Safety department also
actively train our managers, supervisors and
employees to maximise their health and well
being at work.
Attendance
Our absenteeism rate for all Group sites is currently
3.6% (4.0% in 2005). This compares well with other
manufacturing business in the UK and mainland
Europe. We continue to train managers in
absenteeism management techniques and operate
attendance bonus schemes across many sites.
Communications
We recognise trade unions across nine sites in the
Group for separate collective bargaining purposes. 
We provide information, consult and negotiate with
the trade unions on a range of subjects including 
pay, hours and holidays. We have Works Councils 
in mainland Europe and at a number of our non-
unionised sites in the UK. We have local site
Communication Forums at some sites. Our 
Managing Directors deliver regular business 
updates directly to the workforce. 
The Employee Information & Communication 
Body (EICB) was established in 2005 and meets 
twice per year. The EICB brings together employee 
representatives from across our UK business to 
discuss business issues with Senior Directors within 
the Group including Main Board members. This
involves the provision of information, consultation
and discussions with a view to reaching agreement
regarding decisions that are likely to lead to 
substantial changes in work organisation or in 
contractual relations prior to any action being taken.
The annual European Communication Forum (ECF)
discusses trans-national issues that may affect our
employees in the UK, Netherlands, Belgium and
Ireland. Employees regularly receive written 
communications explaining issues discussed 
at these meetings. 
We have a ‘whistle blowing policy’ in place which
seeks to encourage employee participation in the
identification of any wrong doing within the 
organisation. We have a ‘Grievance Policy’ which
operates throughout our sites allowing employees 
to communicate any employment dissatisfaction 
which they may have.
Pay & Benefits 
Terms and conditions (including pay) are set at local
site level. We have a range of benefits including
competitive pay rates, a number of bonus schemes
for employees at all levels and final salary and other
pension schemes with employer contributions and 
a range of health care benefits. Senior employees’ 
pay and rewards are formally benchmarked against
market data. We voluntarily operate enhanced
maternity and paternity pay schemes and regularly
consider and agree requests for flexible working. 
We have introduced a childcare voucher scheme 
to support employees who are working parents. 
China 
We have a highly-committed and skilled workforce
which has worked to build this business over the 
past eleven years. The same standards of health 
and safety, fairness, equality and merit applied in 
our European businesses are replicated in China.
Senior UK Directors are responsible for this business.
We do not employ child labour. Employees are
recruited from the local area, do not live at the work
premises and return home at the end of their shift.
Rates of pay are competitive for the region and are
negotiated by elected representatives.
Report by Directors & Business Review 27
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 27 PROTECTING
Silotite
®
Polybale
®
Visqueen Poliwrap
®
We pioneered multilayered silage 
stretchwrapping film in 1986. Our
leading brands of silage stretchwrap
now protect in excess of 30 million
tonnes of natural animal fodder in
over 50 countries each year.
The primary function of many of our products 
is protection. This is particularly true of silage 
stretchwrap. Thousands of farmers choose our 
films to preserve their animals’ winter feed. 
Our silage film has advanced technical properties 
giving high puncture resistance, an excellent gas 
barrier to assist the ensiling process and protection 
against Ultraviolet (UV) degradation of the film under 
the extremely high levels of UV radiation experienced 
in some parts of the world.
28 Report by Directors & Business Review
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 28 Over the last 20 years we have worked with 
farmers, agricultural contractors and universities 
to optimise our silage stretchwrap. We now offer
products that enable farmers to produce high-
quality baled silage using a minimum of polythene
film. Typically, 600kgs of silage are wrapped using
less than a kilo of polythene film. After the silage 
has been used the polythene film can be recycled. 
We have invested in extensive recycling facilities 
for silage film at our Dumfries site which can now
process 30,000 tonnes of agricultural waste 
arisings per year. We also support agricultural 
recycling schemes in many of the countries 
where we sell silage film.
REDUCE, RE-USE, RECYCLE
Report by Directors & Business Review 29
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 29 30 Report by Directors & Business Review
FINANCIAL REVIEW
RESULTS
The consolidated financial statements for the Group,
which are prepared in accordance with International
Financial Reporting Standards, as adopted by the EU,
are included on pages 42 to 67. The individual
accounts of the holding company, British Polythene
Industries PLC, continue to be prepared under UK
GAAP and are shown separately on pages 68 to 75.
KEY PERFORMANCE INDICATORS (“KPIS”)
The Group has three main financial KPIs. From 
an operational point of view the most significant 
measure is Operating Profit per Sales Tonne. We 
relate operational performance to the volume of sales
rather than the value of sales which can be highly
volatile due to fluctuating raw material prices. From
a shareholder point of view, the most significant KPIs
are Earnings per Share and Dividend Cover. 
SALES
Total sales increased by 1% to £414 million. The
increase reflected higher selling prices as raw material
and energy cost increases were passed on to
customers. However, the benefit of this was almost
entirely offset by reduced volumes. Overall, volumes
were 4% down on the previous year, with the UK
down 6% and Europe up 4%. 
OPERATING PROFIT
Operating profit reduced from £23.3 million to 
£17.1 million. This represented a 23% fall in operating
profit per tonne from £72/tonne to £55/tonne.
Margins had benefited in 2005 as raw material cost
increases were passed on to customers. However, in
2006, we faced further raw material price increases
coupled with significant increases in UK electricity
costs. In an environment of low demand and over
capacity in a number of UK sectors, these record
input costs proved difficult to pass through and
margins were inevitably squeezed.
RESTRUCTURING
Costs of £0.5 million were incurred in the closure of
sites at Norwich and Birkenhead and a number of
other redundancies across the Group. These costs
were offset by £0.5 million profit on the sale of the
Redditch site which was closed in 2005. In early 2007,
three further closures were announced. The total 
cost is expected to be around £1.5 million and annual
benefits, which will not be fully realised until 2008,
should be around £2 million.
FINANCIAL SHARED SERVICE CENTRE
During 2006, we set up a Financial Shared Service
Centre at Greenock to centralise transaction 
processing and financial accounting for our UK 
businesses. The process of migration from existing
accounting centres is expected to be complete by the
end of 2007. This will result in process improvements
and cost savings of around £0.5 million per annum.
INTEREST
Our net borrowing costs reduced from £3.2 million to
£2.8 million. Following good cash generation in 2005,
average borrowings were lower than the previous
year, particularly in the first half. We maintain a 
significant level of borrowings in Euros rather than
sterling which reduces the average interest rate. 
TAXATION
The current year rate is 31.5% which is mainly
the result of a 30% charge in the UK, 34% in Belgium
and 29.6% in the Netherlands. The UK and Belgian
rates are the same as last year with the Dutch rate
dropping from 31.5% in 2005 and moving to 25.5% 
in 2007. The current year tax rate is adjusted by a
number of prior year items due to the settlement 
of outstanding discussions with the relevant tax
authorities and adjustments made on filing of prior
period tax returns giving an overall tax rate of 28%
which is in line with last year.
EARNINGS PER SHARE
Diluted earnings per share reduced by 29% to 38.46p.
DIVIDEND
The proposed final ordinary dividend of 15p per 
share (2005 – 15p) is to be paid on 11 May 2007 to 
shareholders on the register at the close of business
on 16 March 2007 making with the interim ordinary
dividend of 7p per share (2005 – 7p) paid on 22
November 2006 a total of 22p (2005 – 22p) per 
share for the year. Dividend cover is 1.75 times.
CASH FLOW & BORROWINGS
Operating cash flow reduced by £14.4 million, 
reflecting the lower operating result, £3.5 million of
additional pension contributions and a £6.1 million
increase in working capital. Stock values remained
high due to continued high polymer prices and an
increased level of silage stock build for the 
2007 season.
Capital expenditure, including computer software,
reduced by £1.8 million to £12.5 million which is 
similar to the annual depreciation charge. This 
expenditure was offset by £0.9 million of proceeds
from the sale of surplus assets, mainly vacant 
freehold properties.
Net borrowings increased by £4.9 million to 
£52.0 million. Interest cover was 6.1 times and 
net debt to EBITDA was 1.75 times.
Operating profit per
tonne (£’000/tonne)
55
72
2005
41
2004
Financial KPI’s
Dividend cover 
(times)
1.75
2.50
2005
1.50
2004
Diluted earnings
per share (pence)
38.46
54.28
2005
31.50
2004
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 30 Report by Directors & Business Review 31
BORROWING FACILITIES
Our borrowings comprise a £32.5 million revolving
credit facility repayable in June 2010. We also have 
a 10 year fixed rate private placement of £20 million
repayable in July 2009. In addition, short-term 
overdraft facilities of £21.5 million are available from
our main clearing banks and a further £10 million 
is available on short-term arrangements to fund 
our overseas businesses. We also have a £2 million 
leasing facility, bringing the total Group facility to 
£86 million. 
TREASURY POLICY
The Group has taken most of its sterling debt on 
a fixed basis while maintaining its Euro debt on a 
floating basis, in order to take advantage of lower
short-term Euro interest rates. £20 million of 
borrowings were maintained on a fixed basis during
the year. Borrowings are maintained in currencies
other than sterling to provide a hedge against the net
asset position in overseas subsidiaries and short-term
trading assets and liabilities in subsidiary entities.
Derivative instruments are only used to facilitate this
hedging policy or to balance interest rate exposures
and, where significant, are approved at Board level.
The advent of a futures market for linear low density
polyethylene on the London Metal Exchange may,
eventually, provide the Group and its customers with
opportunities to reduce the effect of raw material
price volatility. The market commenced trading 
in May 2005, but liquidity has been low and the 
correlation with physical transaction prices has been
poor. The recent decision to introduce spot prices
and launch new regional contracts may provide more
liquidity and enable a more effective hedging 
mechanism in the future. 
FINANCIAL RISK MANAGEMENT
Disclosures in respect of Financial Risk Management
objectives and policies relative to financial risk are
included within the notes on pages 48 to 67.
PENSION FUND
During 2006, we entered consultation with active
members of the Group defined benefit pension 
fund to modify future benefits in the scheme. From 
1 January 2007, the accrual rate will reduce from
1/60ths to 1/80ths, unless employees choose to
increase their own contributions to maintain 1/60ths.
In addition, normal retirement age will move from 60
to 65. These changes will reduce the annual current
service cost by around £1 million.
The Group also committed to increase annual 
contributions by £2 million and to make a special
contribution of £10 million, which will be spread over
18 months to maximise tax efficiency. £3.5 million of
the special contribution was paid in December 2006.
Along with the £1 million per annum from the 
reduction in current service cost, this represents 
an additional £25 million of deficit reduction 
contributions over five years. In 2007, we expect to
pay £5.5 million of regular contributions, including the
increase of £2 million, plus a further £3 million of the
special contribution giving a total of £8.5 million.
The deficit in the fund reduced from £54 million at 
31 December 2005 to £33 million at 31 December 2006. 
POLICY ON PAYMENT OF SUPPLIERS
Terms and conditions are agreed with suppliers
before business takes place and the policy is to pay
agreed invoices in accordance with the terms of 
payment. At the year end the amount owed to trade
creditors by the Group was equivalent to 57 days
(2005 – 58 days) of purchases from suppliers.
The Group does not follow any code or standard on
payment practice but it is the Group’s policy to pay 
all of its suppliers within 30 days of the end of the
month in which it receives the goods or services
unless other payment terms have been agreed.
AUDITORS
A resolution is to be proposed at the Annual General
Meeting for the re-appointment of KPMG Audit Plc as
auditors of the Company and for their remuneration
to be agreed by the Directors.
STATEMENT AS TO DISCLOSURE 
OF INFORMATION TO AUDITORS
The Directors who held office at the date of approval
of this Directors’ report confirm that, so far as they 
are each aware, there is no relevant audit information
of which the Company’s auditors are unaware; and
each Director has taken all the steps that he/she
ought to have taken as a Director to make himself/
herself aware of any audit information and to
establish that the Company’s auditors are aware 
of that information.
SUBSTANTIAL SHAREHOLDERS
The Company has been notified of interests
representing 3% or more of the issued share capital
of the Company as at 5 March 2007. See table below
GOING CONCERN
After making enquires, the Directors have a 
reasonable expectation that the Group has adequate
resources to continue in operational existence for the
foreseeable future. For this reason, they continue to
adopt the going concern basis in preparing the 
financial statements. 
ANNE THORBURN
GROUP FINANCE DIRECTOR
Deficit at 31 December 2005 (54)
Surplus of contributions over current 4
service cost
Higher than expected return from investments 5
Reductions in liabilities due to improvement 10
in real yields
Other factors 2
Deficit at 31 December 2006 (33)
Shares
Aberforth Partners LLP 4,028,000 15.2%
Aberdeen Asset Management 1,894,483 7.2%
Axa SA 1,541,851 5.8%
Barclays plc 1,484,169 5.6%
UBS AG 1,357,527 5.1%
Legal & General Investment 965,875 3.6%
Management Ltd
Pension scheme summary £m Substantial shareholders
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:20  Page 31 32 Report by Directors & Business Review
CAMERON McLATCHIE CBE* (60)
CHAIRMAN
Cameron joined the Board in 1983 on the acquisition of
Anaplast where he had been Chairman and Managing Director
since 1975, becoming Group Chairman and Chief Executive in
1988. He relinquished the role of Chief Executive in May 2003.
LORD JAMIE LINDSAY* (51)
NON-EXECUTIVE DIRECTOR
Lord Lindsay joined the Board in March 2006 and is currently 
a Non-Executive Vice Chairman of the Scottish Agricultural
College, a Non-Executive Director of Scottish Resources Group
Limited and Chairman of UKAS (UK Accreditation Service) and
from 1998-2005 was a Non-Executive Director of the property
company UA Group PLC.
JOHN LANGLANDS CA (54)
CHIEF EXECUTIVE
Joined the Group in 1995 as Group Finance Director from
Eclipse Blinds plc where he was also Finance Director. He was
previously Finance Director at Scottish Enterprise and United
Wire Limited. Appointed Chief Operating Officer in May 2002 
and Chief Executive in May 2003.
HAMISH GROSSART* (50)
NON-EXECUTIVE DEPUTY CHAIRMAN
Hamish is currently Deputy Chairman of Cairn Energy PLC,
Chairman of Indigo Vision Group plc and a Director of Artemis
Investment Management Limited. After a career in investment
banking, he has, over the last 20 years, held a range of executive
and non-executive board positions in listed companies 
covering a wide variety of industries. Past Chairmanships
include: Royal Doulton PLC, Eclipse Blinds plc, Scottish Highland
Hotels PLC, Hicking Pentecost PLC and EFT Group plc.
ANNE THORBURN CA (46)
GROUP FINANCE DIRECTOR
Anne joined BPI in 1996 and has had several senior financial
roles in the Group. She was previously Group Finance 
Director of Clyde Blowers PLC and a Senior Manager 
in KPMG Corporate Finance. 
ERIC M HAGMAN CA CBE* (60)
NON-EXECUTIVE DIRECTOR 
Eric was previously a senior partner in Andersen UK before
joining the Board in 2002. He is on the boards of Glen Group
plc, The Royal College of Art and The Scottish American
Investment Company plc. In addition, he is Chairman of 
AON Scotland.
BOARD OF DIRECTORS & ADVISERS
*Member of the Remuneration, Audit and Nominations Committees.
ADVISERS
AUDITORS
KPMG Audit Plc, 191 West George Street,
Glasgow G2 2LJ.
BROKERS
Investec Banking, 2 Gresham Street,
London EC2V 7QP.
SOLICITORS
Maclay Murray & Spens
151 St Vincent Street, Glasgow G2 5NJ.
CLEARING BANKS
Lloyds Bank PLC,
Royal Bank of Scotland plc.
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:21  Page 32 Report by Directors & Business Review 33
CORPORATE GOVERNANCE REPORT
Throughout the year to 31 December 2006, the
Company complied with the provisions of the revised
Combined Code on corporate governance issued 
by the Financial Reporting Council in July 2003 and 
as updated in October 2005. The Board remains 
committed to the highest standards of corporate
governance and this statement describes how the
principles of the Code are applied and reports on 
the Group’s compliance with the code’s provisions.
THE BOARD
The Group is controlled through its Board of Directors
which meets a minimum of six times per year. The
Board’s main roles are to create shareholder value, 
to provide leadership to the Group, to approve the
Group’s strategic objectives and to ensure that the
necessary financial and other resources are made
available to allow the Group to meet those objectives. 
The Board has adopted a formal schedule of matters
reserved for its decision such as the approval of 
corporate strategy plans, annual budgets and risk
management strategy. Major acquisitions and 
disposals, as well as major capital expenditure, are
authorised by the Board and are subsequently 
monitored by the Board after execution. The Board
also reviews the environmental, health and safety
performance of the Group.
The Board has delegated the following 
responsibilities to the Group Management 
Board: the development and recommendation of
strategic plans for consideration by the Board that
reflect the longer-term objectives and priorities 
established by the Board; implementation of the
strategies and policies as determined by the Board;
monitoring operational and financial results against
budgets; prioritising the allocation of capital, technical
and human resources; ensuring that appropriate
management development and succession plans 
are in place; and developing and implementing risk 
management systems.
The Company has in place appropriate insurance
cover for the Board members, in respect of any legal
action taken against them.
CHANGES TO BOARD COMPOSITION
DURING THE YEAR
Professor Neil Hood was a Non-Executive Director 
but sadly, after a long illness passed away on 
2 February 2006.
Lord Lindsay was appointed as a Non-Executive
Director, on 20 March 2006 and serves on the Audit,
Remuneration and Nomination Committees. 
John Houston retired as a Non-Executive Director 
on 7 May 2006. 
THE RESPONSIBILITIES OF THE CHAIRMAN
AND CHIEF EXECUTIVE 
The division of responsibilities between the Chairman
of the Board, Cameron McLatchie, and the Chief
Executive, John Langlands, is clearly defined and
has been approved by the Board.
The Chairman leads the Board in the determination
of its strategy and in the achievement of its 
objectives. The Chairman is responsible for organising
the business of the Board, ensuring its effectiveness
and setting its agenda. The Chairman facilitates the
effective contribution of Non-Executive Directors,
manages the relationship between Executive and 
Non-Executive Directors, and ensures Directors
receive accurate, timely and clear information 
and that there is effective communication with 
shareholders. The Chairman continues to have an
executive role in the strategy for polymer purchasing
and authorisation of capital expenditure proposals.
The role of Non-Executive Deputy Chairman and
Senior Independent Director is carried out by 
Hamish Grossart.
The Chief Executive has direct charge of the Group
on a day-to-day basis and is accountable to the Board
for its financial and operational performance. He
chairs the Group Management Board and is also
responsible for Environmental Matters, Health and
Safety and Human Resources. He has a senior 
management team that look after the day-to-day
activities of these two matters and they both report
directly to him.
DIRECTORS AND DIRECTORS’ INDEPENDENCE
The Board currently comprises the Chairman, the
Chief Executive, the Finance Director and three 
Independent Non-Executive Directors. Biographical
details of each Director are shown on page 32. All of
the Directors, with the exception of Lord Lindsay, 
John Houston and Professor Neil Hood, served
throughout the period under review. The Board
includes Independent Non-Executive Directors who 
constructively challenge and help develop proposals
on strategy and bring strong, independent judgement,
knowledge and experience to the Board’s deliberations.
The independent Directors are of sufficient calibre
and number that their views carry significant weight
in the Board’s decision making.
The Board has access to the advice and services of a
full-time experienced Company Secretary, appointed
by the Board. Directors are also given access to
independent professional advice, at the Group’s
expense, when the Directors deem it necessary 
in order for them to carry out their responsibilities. 
No such advice was sought in the year.
The Board considers all of its Non-Executive Directors
who served during the year to be independent in
character and judgement.
PROFESSIONAL DEVELOPMENT
On joining the Board, Directors are provided with
documentation on the Company and its activities. 
An induction programme and site visits are arranged
to major business units and to meet with members 
of the Group Management Board and other key
Senior Executives. Throughout their period in 
office the Directors are continually updated on the
Group’s business, the competitive and regulatory
environment and the industry it operates in. Board
Meetings are regularly held at operational sites and
tours are arranged to ensure that the Board is kept 
up-to-date with the latest operational developments. 
Directors are also advised, on appointment, of their
legal and other duties and obligations as a Director of 
a listed company, both in writing and in face-to-face
meetings with the Company Secretary. External 
training courses are provided where necessary. 
They are reminded of these duties each year and 
are also updated on changes to the legal and
governance requirements of the Group and
themselves as Directors. 
PERFORMANCE EVALUATION 
The Board has established a formal process, 
led by the Chairman, for the annual evaluation of the 
performance of the Board, its principal Committees
and individual Directors. The Directors are made
aware that their performance will be subject to 
an annual evaluation.
The Directors have developed a review process that
provides a framework for the Chairman to carry out
the annual evaluation of the performance of the
Directors and principal Committees. The review
process covers the evaluation of the Chairman, the
Board, the Remuneration Committee, the Nomination
Committee, the Audit Committee and the individual
Directors. The process includes specific references 
to the objectives of the Board and Committees and
each Board member participates in the process. The
Chairman consolidates the feedback of the Directors
into a performance assessment summary for each
individual Director and the Board performance as 
a whole. The Chairman shares and discusses the
individual performance summary for each Director 
with that Director only and discusses the
consolidated performance review with the 
Board as a whole.
The Chairman meets annually with the 
Non-Executive Directors to review performance
and other matters.
The Deputy Chairman, who is also the Company’s
Senior Independent Director, sought the views of the
Executive Directors and met with each of the other
Non-Executive Directors, in the absence of the
Chairman, to discuss and assess the Chairman’s
performance. The Board (not including the Chairman)
is satisfied that the Chairman’s performance 
is effective and he demonstrates continued 
commitment to the role.
RE-ELECTION OF DIRECTORS
Directors appointed by the Board other than at an
Annual General Meeting are required to retire at the
following Annual General Meeting when they may
offer themselves for election. Directors are thereafter
required to seek re-election every three years. The
Chairman, who was previously Chief Executive, has
voluntarily decided to seek re-election each year. 
Non-Executive Directors, subject to satisfactory 
performance evaluation, are appointed for an initial
period of three years. Before the third and sixth
anniversary of the Non-Executive Director’s first
appointment, the Director discusses with the Board
whether it is appropriate for a further three year 
term to be served. No Non-Executive Directors 
have served for more than nine years.
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:21  Page 33 THE COMPANY SECRETARY
The Company Secretary is responsible for advising
the Board through the Chairman on all governance
matters and the Directors have access to the 
advice and services of the Company Secretary. 
The Company’s Articles of Association and the
schedule of matters reserved to the Board for
decision provide that the appointment and 
removal of the Company Secretary is a matter 
for the full Board.
AVAILABILITY OF INFORMATION
Executive management is responsible for providing
the Board with all the information, of which it is 
aware, that is relevant to the discharge of the Board’s
responsibilities. The Board therefore expects to
receive timely advice on all material information
about the Company, its operating units, its activities,
performance and its investment projects. The
Chairman, together with the Company Secretary,
establishes the agenda for each Board meeting 
and the necessary papers are distributed to Board 
members in advance of the meeting. Presentations
on specific subjects are sent to the Board in 
advance, so that Board meeting time is used 
for focused discussion.
RELATIONS WITH SHAREHOLDERS
In fulfilment of the Chairman’s obligations under 
the Combined Code, the Chairman gives feedback
to the Board on issues raised with him by major
shareholders. Non-Executive Directors remain 
available to meet with major institutional shareholders
if required. External analysts’ and brokers’ reports 
are circulated to all Board members and, where
appropriate, formally discussed at Board meetings.
The Board seeks to encourage shareholders to attend
its Annual General Meeting. The Company uses the
Annual General Meeting to communicate with private
investors and to encourage their participation. 
They have the opportunity to put questions to
members of the Board on matters relating to the
Group’s operation and performance. All Directors 
are expected to be present and those who chair
Committees of the Board will be available to answer
any relevant questions. The level of proxy votes
lodged on each Resolution will also be indicated 
at the meeting. All shareholders have access to 
the Group’s website at www.bpipoly.com
Each year a programme of meetings with major
institutional investors takes place covering the
principal issues affecting the Group, its trading
and its results. 
INTERNAL CONTROL
In accordance with the guidance of the Turnbull
Committee the Board of Directors: is responsible
for the Company’s system of internal control; sets 
appropriate policies on internal control; seeks regular
assurances that enable it to satisfy itself that the 
system is functioning effectively; and ensure that the
system of internal control is effective in managing
risks in the manner which it has approved. The risk
management process and systems of internal control
are designed to manage rather than eliminate the risk
of the Group failing to achieve its business objectives.
It should be recognised that such systems can only
provide reasonable and not absolute assurance
against material misstatement or loss.
The Directors have continued to review the 
effectiveness of the Group’s system of financial 
and non-financial controls. These reviews include 
an assessment of internal controls by the internal
audit function, risk assessments by the business 
management and reports from the external auditors
on matters identified in the course of its statutory
audit. A key part of these reviews is a bi-annual risk
assessment process where responsible managers
confirm the adequacy of their systems of internal
financial and non-financial controls, their compliance
with Group policies (including health, safety and the
environment), local laws and industry regulations. 
This formal risk assessment process also identifies,
evaluates and confirms what actions are being 
taken to mitigate any identified risks. All these risk
assessments are reviewed bi-annually by the Board
and Audit Committee. The creation of a centralised 
IT function at Stockton-On-Tees has been identified
as a potential risk, but the Board are satisfied that 
with the implementation of a disaster recovery plan,
the risk has been mitigated.
BOARD COMMITTEES
The number of Board meetings and Committee
meetings attended by each Director during the 
year was as follows:
Figures in brackets indicate the maximum number 
of meetings in the period in which the individual 
was a Board member.
A copy of the full terms of reference, for the
Nomination, Remuneration and Audit Committees are
available on the Group’s website at www.bpipoly.com
NOMINATIONS COMMITTEE
The Board as a whole is responsible for the procedure
of agreeing to the appointment of its own members,
for nominating them for election by the shareholders
on first appointment and, thereafter, at three yearly
intervals. The Nominations Committee, comprising
a majority of Non-Executive Directors, has the
responsibility for making recommendations for
new appointments to the Board. Hamish Grossart,
Non-Executive Deputy Chairman and Senior
Independent Director, chaired the Committee
and the other members are Eric Hagman and
Lord Lindsay. 
Lord Lindsay was appointed as a Non-Executive
Director, on 20 March 2006 and re-elected at the
Annual General Meeting on 11 May 2006. The
Nominations Committee fully discussed the 
qualities and skills required to fill the position, and 
had clear criteria on the attributes required for this
appointment. Through the Nomination Committee’s
contacts a number of individuals who met the criteria
were identified as potential candidates. The Board
considered that Lord Lindsay was the most suitable,
with his considerable experience of work within the 
private and public sectors, particularly in the areas 
of environmental management and corporate and
institutional responsibilities. This position was not
advertised nor was a recruitment agency employed.
For any new Non-Executive Director, terms and 
conditions of appointment are available for inspection
at the Annual General Meeting and the Company’s
registered office. 
The Nominations Committee reviews the succession
planning and composition of the Board on an annual
basis and report their conclusions to the Board for
further action. 
34 Report by Directors & Business Review
Board Nomination Remuneration Audit 
meetings Committee Committee Committee 
meetings meetings meetings
Number of Meetings in year 6223
C McLatchie 6 – – –
J T Langlands 6 – – –
A Thorburn 6 – – –
H M Grossart 5223
E M Hagman 6223
Lord Lindsay 5 (5) 1 (1) 1 (1) 2 (2)
J M Houston 2 (2) 1 (1) 1 (1) 1 (1)
CORPORATE GOVERNANCE REPORT
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:21  Page 34 Report by Directors & Business Review 35
REMUNERATION COMMITTEE
Hamish Grossart is Chairman of the Remuneration
Committee and the other members are, Lord Lindsay
and Eric Hagman. Prior to his death Professor Neil
Hood served on the Committee, as did John Houston
prior to his retirement. The Remuneration Committee
is responsible for advising the Board on the
remuneration of Executive Directors. 
The Committee’s principal responsibilities are:
– Setting, reviewing and recommending to 
the Board for approval the Group’s overall
remuneration policy
– Setting, reviewing and approving individual
remuneration packages for executive Directors 
and the Chairman, including terms and conditions 
of employment
– Reviewing the salary structure and terms,
conditions and benefits of employment of 
other Senior Group Executives
– Approving the rules, and launch, of any Group 
share, share option or cash based incentive scheme 
and the grant, award, allocation or issue of shares, 
share options or payments under any such scheme
In addition, the Committee regularly reviews the
Group’s remuneration policy relative to its 
competitors and industry norms.
The Chairman of the Committee is available to answer
questions at the Annual General Meeting. 
THE AUDIT COMMITTEE 
The Company has an Audit Committee comprising of
all the Non-Executive Directors and is chaired by Eric
Hagman. The Committee meets at least three times
a year and has written terms of reference that outline
its authority and duties.
The Committee:
– Monitor the integrity of the financial statements 
of the Group;
– Review the Group’s internal financial control and 
risk management systems;
– Monitor and review the effectiveness of the Group’s 
internal audit function; and
– Oversee the Group’s relationship with the 
external auditor.
Should the Committee’s monitoring and review 
activities reveal any material cause for concern or scope
for improvement, it will make recommendations to
the Board on action needed to address the issue or
make improvements.
The Company Secretary acts as secretary to the
Committee and the minutes of the Committee are
circulated to all Board members. The Finance Director
normally attends the meetings by invitation. 
The Chairman and Chief Executive are also invited 
to attend, if required to do so, by the Committee.
The Director of Group Risk and Audit also attends
the meetings and the Company’s external auditors
attend at least twice a year. The Committee
discharges its responsibilities by:
– Reviewing the external and internal audit 
work plans.
– Receiving and reviewing half yearly risk
management reports and risk tables. Business and 
Group management operate a risk management 
process which identifies the key risks facing each 
business and the Group and reports via internal 
audit as to how those risks are being managed.
This is based on business and Group risk tables 
identifying the key risks, the probability of those 
risks occurring, the estimated potential impact 
if they do occur and the actions being taken to
manage those risks.
– Receiving and considering reports from
management and internal audit on the system
of internal control and any significant control
weaknesses. The Audit Committee also receives 
reports from the external auditors who consider 
controls only to the extent necessary to form
an opinion as to the truth and fairness of the
financial statements.
– Discussing with management the actions taken 
on control weaknesses identified in internal and
external audit reports.
– Receiving and reviewing the annual Combined 
Code internal control report prepared by internal 
audit. This is based on a combination of risk
management reporting and the completion by 
each business of key control questionnaires which 
confirm the extent to which the business complies 
with the Group control procedures. Each business 
Managing Director and Finance Director is required 
to sign off a declaration confirming that they have 
reviewed the business risk table and control
questionnaires and confirming compliance
with statutory obligations.
– Reviewing the Group’s draft interim and final
financial statements prior to Board approval and
considering any significant financial reporting
judgements contained in the financial statements
to ensure that the integrity of these statements
are maintained. The Committee also reviews the
external auditor’s reports thereon. 
– Considering the appropriateness of the Group’s 
accounting policies
– Reviewing the performance of the Group’s external
auditors and making appropriate recommendations
to the Board relating to their reappointment
and remuneration.
The external auditors are given the opportunity each year
to speak confidentially to the Non-Executive Directors.
The Audit Committee also monitors the Group’s 
whistle blowing procedures, ensuring that 
appropriate procedures are in place to allow
employees to raise matters of possible impropriety
in confidence.
AUDITORS’ INDEPENDENCE 
AND OBJECTIVITY
The Audit Committee monitors regularly the non-
audit services being provided by its external auditors
to ensure their independence. There are services
which the external auditors are precluded from
undertaking, including the provision of internal audit
services, as well as services they are permitted to
provide, but which require the specific approval of the
Audit Committee. This occurs where non-audit work
per project is in excess of £50,000 or £100,000
in aggregate in any one year and within these
parameters certain services are delegated to the
Executive Directors to approve. Any activities that
may be perceived to be in conflict with the role of
external auditor must be submitted to the Committee
for approval prior to engagement.
Details of the amount paid to the external auditors
during the year for audit and other services are set
out in the notes to the financial statements on
page 52.
Report by Directors & Business Review
Signed 
By Order of the Board
RAY BROOKSBANK
GROUP COMPANY SECRETARY
5 MARCH 2007
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:21  Page 35 36 Report by Directors & Business Review
POLICY ON DIRECTORS’ REMUNERATION
The remuneration policy is set by the Board and is
described below. Individual remuneration packages
for Executive Directors are determined by the
Remuneration Committee within the framework 
of this policy and approved by the Board. 
The remuneration of all Non-Executive Directors is
determined by the Executive Directors and approved
by the Board.
GENERAL INFORMATION
The names of the Directors who have served on 
the Remuneration Committee during the year 
are as follows:
Hamish M Grossart 
Eric M Hagman 
Lord Lindsay – appointed 20 March 2006
John Houston – retired 11 May 2006
Neil Hood – died 2 February 2006
Cameron McLatchie assists the Remuneration
Committee in their deliberations on Directors’
remuneration, but absents himself when his
remuneration is discussed.
The Remuneration Committee has previously taken
advice from the Monks Partnership on structuring
Directors’ remuneration packages. Monks Partnership
does not provide any other services to the Company.
GENERAL POLICY
The Company’s policy on Directors’ remuneration is
designed to attract, retain and motivate high-calibre
individuals, to reward Directors fairly for their
contributions, whilst remaining within the range of
benefits offered by similar companies in the sector.
The Remuneration Committee seeks to structure
total benefit packages which align the interests 
of shareholders and Senior Executives. Directors’
remuneration will be the subject of regular review, 
in accordance with this policy in the next and
following financial years.
The Remuneration Committee has established a
number of performance related elements of the
executive remuneration packages. These consist 
of an annual Executive Bonus calculated as a
percentage of basic salary. The Executive Bonus is
limited to 80% of basic salary. In addition, there is 
a Long-Term Incentive Plan (“LTIP”) which grants
annual awards of shares to an upper limit of 100% 
of basic salary and is dependent upon performance
conditions measured over a three year period.
The LTIP replaced the previous Share Option Scheme
and the Restricted Share Plan. It is considered that
the non-performance and performance elements
of the Directors’ packages are equally important.
LONG-TERM INCENTIVE PLAN (“LTIP”)
Participants are granted awards of shares, the vesting
of which will be dependent upon performance
conditions measured over a period of three years.
There is an individual upper limit on each award of
100% of basic salary per annum. The Remuneration
Committee decided that one half of each award is
subject to an Earnings Per Share (“EPS”) performance
condition and the remaining half is subject to a Total
Shareholder Return (“TSR”) performance condition
comparing the Company’s TSR with that of the
companies comprising the FTSE Support Services
Sector. The Company shares are no longer included
in the FTSE Support Services Sector, and therefore, 
in order to monitor the performance conditions 
in connection with the 2005 awards the performance 
of the companies that comprised this index will 
continue to be tracked. Awards for 2006 and 
future years will be based on the FTSE Small Cap
Industrials Index.
The EPS linked proportion of any award will vest in 
full if the Company’s EPS growth is at least the Retail
Price Index (“the RPI”) plus 10% per annum over 
the performance period; no shares will vest if EPS
growth is not at least RPI plus 3% per annum. 
For performance between these two points, 
vesting will occur on a sliding scale.
In respect of the proportion of any TSR linked award,
no vesting will occur for ranking below median. At the
median 10% of the award will vest with the full 50%
vesting for a ranking at or above the upper quartile.
Vesting occurs on a sliding scale between these two
points. No awards will vest unless the remuneration
committee is satisfied that there has been a 
satisfactory and sustained improvement in the
underlying financial position and performance over
the performance period.
The Remuneration Committee is satisfied that 
these conditions are challenging and that the full
award will only vest if exceptional performance 
has been achieved.
In conjunction with the introduction of the LTIP the
Remuneration Committee has adopted a formal
shareholding guideline. These guidelines require
Executive Directors to acquire and retain shares with 
a value equal to 100% of one year’s basic annual
salary over a five year period.
EXECUTIVE SHARE OPTIONS
The performance condition attached to share
options, granted to Directors under the Executive
Share Option Plan, is that over a three year period
growth in the Company’s Basic Earnings Per Share
(“EPS”) before exceptional items will be compared
with the rate of inflation, determined by reference to
the RPI. No part of an option will be exercisable unless
growth in EPS exceeds that of the RPI by at least 9%.
At the minimum level 50% of an option will vest, with
full vesting at 15% above the RPI. Between these two
points a proportion of an option will vest on a straight-
line basis. If the minimum level is not achieved in the
three year period, the performance period will be
extended to four and then five years, with an addition
of 3% to the minimum and 5% to full vesting targets
for each additional year.
The only awards under the Scheme were in 2003. 
The performance criteria for full vesting were
achieved as at 31 December 2005 and, therefore, 
no retesting will be necessary.
The Remuneration Committee has decided 
that there will be no further awards under this
Executive Share Option Plan. 
DIRECTORS’ REMUNERATION REPORT
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:21  Page 36 SERVICE CONTRACTS
The Company’s policy on the duration of Director’s
contracts is that:
– Executive Directors should have rolling service 
contracts terminable on no more than one year’s 
notice served by the Company or the Director; and
– Non-Executive Directors are appointed for fixed 
terms of three years, renewable on the agreement
of both the Company and the Director.
The policy on termination payments is that the
Company does not normally make payments beyond
its contractual obligations including any payment in
respect of notice to which a Director is entitled after
mitigation is considered. 
In exceptional circumstances an additional ex gratia
payment may be considered, based on factors
including the Directors past contribution and the 
circumstances of the Director’s departure.
Name Date of contract Notice period
C McLatchie 15 June 1992 12 months
J T Langlands 17 July 1995 12 months
A Thorburn 25 February 2004 12 months
H Grossart 12 May 2005 N/A
E M Hagman 15 May 2003 N/A
J Lindsay – appointed 20 March 2006 11 May 2006 N/A
DIRECTORS’ SERVICE CONTRACTS
2002 2003 2004 2005 2006
220
200
180
160
140
120
100
80
60
5 YEAR TOTAL SHAREHOLDER RETURN 
PERFORMANCE GRAPH
The graph below shows a comparison of the total
shareholder return performance for the Company’s
shares for each of the last five financial years, against
the total shareholder return for the companies 
comprised in the FTSE small capital (excluding 
investment trusts). 
The index selected was considered to be the most
appropriate for the Company’s market capitalisation
and industry sector. LTIP Awards are based on the
performance of the FTSE Small Cap Industrials. 
This index did not start until 2003 and, therefore, 
a five year record is not available.
British Polythene Industries PLC – Total Return
FTSE Small Cap EX INV TRUSTS – Total Return Index
Report by Directors & Business Review 37
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:21  Page 37 38 Report by Directors & Business Review
DIRECTORS’ REMUNERATION REPORT
Salary/ Benefits Supplementary Executive Employee profit Total Total
Fees £000 allowance bonus sharing scheme 2006 2005
£000 £000 £000 £000 £000 £000
Executives
C McLatchie 250 12 – – 1 263 269
J T Langlands 250 13 35 38 5 341 455
A Thorburn 155 9 12 23 3 202 268
Non-Executives
H Grossart 60 – – – – 60 44
E M Hagman 35 – – – – 35 27
Lord Lindsay 
(appointed 20 March 2006 23 – – – – 23 –
Former Directors
J Houston (retired 11 May 2006) 11 – – – – 11 29
Prof N Hood (died 2 Feb 2006) 3 – – – – 3 36
Total 2006 787 34 47 61 9 938
Total 2005 756 34 40 277 21 1,128
DIRECTORS’ SHARE INCENTIVES
The following table sets out details of the share
options held by each Director during the year:
Options Options Options Options as Exercise Market value Date from Expiry
at 1 Jan granted exercised at 31 Dec price on date which date
2006 in year in year 2006 of exercise exercisable
C McLatchie
– 4,432 – 4,432 + 369.45p 1 Dec 2011 21 May 2012
J T Langlands
2,536 – (2,536) – + 266.16p 424.8p 1 Dec 2006 31 May 2007
87,000 – (87,000) – > 225.00p 585.0p 10 Mar 2006 9 Mar 2013
13,000 – (13,000) – > 225.00p 586.8p 10 Mar 2006 9 Mar 2013
– 2,557 – 2,557 + 369.45p 1 Dec 2009 31 May 2010
102,536 2,557 (102,536) 2,557
A Thorburn
50,000 – (50,000) – > 225.00p 585.0p 10 Mar 2006 9 Mar 2013
– 4,432 – 4,432 + 369.45p 1 Dec 2011 31 May 2012
50,000 4,432 (50,000) 4,432
+ Savings Related Share Options.
> These options were granted in accordance with the rules of the Executive Share Option Plan approved by shareholders on 16 May 2002. 
DIRECTORS’ EMOLUMENTS & COMPENSATION
The auditors are required to report on the information
contained in the remainder of this Directors’
Remuneration Report.
The emoluments in connection with qualifying
services and compensation of each person who
served as a Director during the year were as follows.
The only awards under the Executive Share Option
Plan were in 2003. The performance criteria for 
full vesting of these options were achieved as at 
31 December 2005 and, therefore, no retesting 
will be necessary. The Remuneration Committee 
has decided that there will be no further awards 
under this plan.
The mid-market closing share price of the Company’s
25p Ordinary Shares ranged from 390p to 715p 
during the year and on 31 December 2006 was
450.25p (2005 – 500p).
Professor Hood’s fees were paid to Neil Hood
and Associates. Benefits receivable by Executive
Directors consists of car buy out allowance and
healthcare insurance.
The supplementary allowance payable to J T Langlands
and A Thorburn is in compensation for the restriction 
imposed by the Pensions Earnings Cap on their
prospective pension entitlement. The earnings cap
was discontinued in April 2006, but the Remuneration
Committee has decided to continue with an identical
cap in order not to add to the past service deficit of
the Defined Benefits Pension Scheme.
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:21  Page 38 RESTRICTED SHARE PLAN
The Executive Directors participated along with other
key executives in the Group in a Restricted Share Plan,
which was approved by shareholders at the 1996
Annual General Meeting. The amount that Executives
could invest was restricted to 30% of their base salary.
If the net of tax executive bonus was invested in
shares of the Company, and retained, the Company
would match these shares on a one-for-one basis
after three, five and seven years. 
Following the introduction of an Executive Share
Option Plan in 2003, there was only one matching
of shares after three years from 2003 onwards. 
As a result of the introduction of the LTIP in 2005
no further awards will be made under the Restricted
Share Plan. The following awards have been made
under the 1996 Restricted Share Plan. 
No shares were vested during the year in connection
with the 1996 Restricted Share Plan.
C McLatchie J T Langlands A Thorburn Total
1999 Bonus
Vesting date 2007* 5,967 4,150 – 10,117
2001 Bonus
Vesting date 2007* 4,404 2,995 1,444 8,843
Vesting date 2009* 4,404 2,995 – 7,399
2003 Bonus
Vesting date 2007* – 10,472 6,792 17,264
Total 2006 14,775 20,612 8,236 43,623
Total 2005 14,775 20,612 8,236 43,623
*Date of the preliminary announcement of the full year results for year ending on the previous 31 December.
Awards Granted Awards Date of Market value
1 Jan 2006 in year 31 Dec 2006 vesting on date of grant
J T Langlands
50,000 – 50,000 Mar 2008 369p
– 25,000 25,000 Mar 2009 689p
50,000 25,000 75,000
A Thorburn
30,000 – 30,000 Mar 2008 369p
– 15,000 15,000 Mar 2009 689p
30,000 15,000 45,000
LONG-TERM INCENTIVE PLAN
Shareholders approved a Long-Term Incentive Plan 
at the 2005 Annual General Meeting. The following
awards were granted and remain outstanding at 
31 December 2006.
The number of awards shown is subject to achieving
the performance conditions referred to on page 64
under both the earnings per share and total shareholder
return awards. 
The figures shown are maximum entitlements and 
the actual number of shares (if any) will depend 
on the performance conditions being achieved. 
Awards take the form of nil cost options and have no
performance retesting facility. No shares have vested 
as at 31 December 2006. Subject to the performance 
conditions being achieved any shares will vest on the
day of the preliminary announcement of the full year
results for the year ended 31 December 2007 and 
31 December 2008.
Report by Directors & Business Review 39
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:21  Page 39 PENSION ARRANGEMENTS
Mr Langlands and Mrs Thorburn are members of the
British Polythene Pension Scheme. Their dependants
are eligible for dependants’ pensions and the 
payment of a lump sum in the event of death in 
service. The British Polythene Pension Scheme 
provides a pension on a defined benefit basis with 
the normal terms topped up to reflect the Director’s 
contractual terms. Final pensionable earnings, 
excluding bonuses and Employee Profit Share
Scheme payments, are used to determine the 
Director’s pension entitlement. Life assurance 
cover is provided at four times annual salary.
The pension entitlements earned by the Directors
during the year calculated in accordance with the
requirements of the UK Listing Authority listing rules
and the Companies Act 1985 as provided by our 
consulting actuaries and confirmed by them are
shown below.
The pension entitlements shown below are the
amounts which would be paid annually from
retirement age based on service to the end 
of the year 2006. 
The increase in accrued pension during the year
excludes any increase for inflation. 
With effect from 1 January 2004 all Directors 
paid member contributions at the rate of 7% of
pensionable salary and these amounts are offset 
in calculating the values shown in columns headed
“Transfer value of net increase over year” and 
“Net change in transfer value during year”.
Transfer values have been calculated on the basis
of actuarial advice in accordance with Actuarial
Guidance Note GN11. 
Transfer value of Net change in 
accrued pension transfer value 
Increase in accrued Total accrued pension Transfer value of Transfer value of at 31 Dec 2006 during year 
pension during year entitlement at net increase over accrued pension (net of member (net of member 
net of inflation 31 Dec 2006 year at 31 Dec 2005 contributions) contributions)
£ p.a. £ p.a. ££££
J T Langlands
3,180 41,570 66,100 551,000 627,500 69,000
A Thorburn
1,720 19,610 15,100 181,000 206,000 17,500
DIRECTORS’ SHAREHOLDINGS
The Directors who served during the year, together
with details of all of their interests in the ordinary
share capital of the Company are listed below:
There have been no changes in the interests of 
the Directors between 31 December 2006 and 
5 March 2007.
APPROVAL BY SHAREHOLDERS
At the Annual General Meeting of the Company to 
be held on 10 May 2007, a resolution approving this
report is to be proposed as an ordinary resolution.
This report was approved by the Board on 2 March
2007 and signed on its behalf by: 
HAMISH GROSSART
DEPUTY CHAIRMAN
5 MARCH 2007
DIRECTORS SHAREHOLDINGS
As at 23 March 2007 the Directors’ interests where
there have been changes after 5 March 2007 were:
E Hagman Beneficial 3,000
J T Langlands Beneficial 93,811
C McLatchie Beneficial 312,281
A Thorburn Beneficial 54,645
At the beginning of March 2006, Mr C McLatchie
transferred the value of his accrued pension out 
of the Scheme. The reduced transfer value of his
accrued pension under the British Polythene Pension
Scheme at that date amounted to £2,654,946 and
was calculated in accordance with the normal
Scheme rules which apply to all members. In addition,
Mr McLatchie was entitled to individual money 
purchase policies valued at £935,354. 
The total value of his benefits at the beginning of
March 2006 in respect of his employment with the
Group amounted to £3,590,300. Consequently, with
effect from March 2006 the Group will not provide 
Mr McLatchie with any further pension entitlement.
Life assurance cover is currently provided for him
under the Scheme at an annual cost of £1,400.
31 Dec 2006 31 Dec 2005
(or date of (or date of
retirement appointment
if earlier) if later)
Ordinary Ordinary
C McLatchie – Beneficial 301,914 622,512
– Non Beneficial 83,150 83,150
H Grossart ––
E M Hagman – Beneficial 13,000 15,000
Lord Lindsay (appointed 20 Mar 2006) – Beneficial 6,500 –
J T Langlands – Beneficial 83,241 82,889
A Thorburn – Beneficial 46,409 37,109
Professor N Hood (died 2 Feb 2006) – Beneficial 4,000 4,000
J M Houston (retired 11 May 2006) – Beneficial 5,000 5,000
40 Report by Directors & Business Review
DIRECTORS’ REMUNERATION REPORT
BPI-001 ANNUAL REPORT.qxp  20/4/07  09:21  Page 40 Financial Statements 41
FINANCIAL STATEMENTS
CONTENTS 
Financial Statements
42 Statement of Directors’ 
Responsibilities
43 Independent Auditors’ Report
44 Five Year Record
45 Consolidated Income Statement
45 Consolidated Statement of 
Recognised Income and Expense
46 Consolidated Balance Sheet
47 Consolidated Cash Flow Statement
48 Notes to the Consolidated Financial
Statements
68 UK GAAP Parent Company 
Balance Sheet
69 Notes to the UK GAAP Parent 
Company Financial Statements
BPI-001 Accounts.qxp  20/4/07  09:27  Page 41 42 Statement of Director’s Responsibilities
STATEMENT OF DIRECTORS’ RESPONSIBILITIES 
IN RESPECT OF THE ANNUAL REPORT 
AND THE FINANCIAL STATEMENTS
The Directors are responsible for preparing the
Annual Report and the Group and parent company
financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare Group
and parent company financial statements for each
financial year. Under that law they are required to
prepare the Group financial statements in
accordance with IFRSs as adopted by the EU and
applicable law and have elected to prepare the 
parent company financial statements in accordance
with UK Accounting Standards and applicable law 
(UK Generally Accepted Accounting Practice).
The Group financial statements are required by law
and IFRSs as adopted by the EU to present fairly the
financial position and the performance of the Group;
the Companies Act 1985 provides in relation to such
financial statements that references in the relevant
part of that Act to financial statements giving a 
true and fair view are references to their achieving 
a fair presentation.
The parent company financial statements are
required by law to give a true and fair view of the 
state of affairs of the parent company.
In preparing each of the Group and parent company
financial statements, the Directors are required to:
– select suitable accounting policies and then apply 
them consistently;
– make judgments and estimates that are reasonable 
and prudent;
– for the Group financial statements, state whether 
they have been prepared in accordance with IFRSs 
as adopted by the EU;
– for the parent company financial statements, state 
whether applicable UK Accounting Standards have 
been followed, subject to any material departures
disclosed and explained in the parent company 
financial statements; and
– prepare the financial statements on the going 
concern basis unless it is inappropriate to presume 
that the Group and the parent company will 
continue in business.
The Directors are responsible for keeping proper
accounting records that disclose with reasonable
accuracy at any time the financial position of the 
parent company and enable them to ensure that its
financial statements comply with the Companies Act
1985. They have general responsibility for taking such
steps as are reasonably open to them to safeguard
the assets of the Group and to prevent and detect
fraud and other irregularities.
Under applicable law and regulations, the Directors
are also responsible for preparing a Directors’ Report,
Directors’ Remuneration Report and Corporate
Governance Statement that comply with that law 
and those regulations.
The Directors are responsible for the maintenance 
and integrity of the corporate and financial
information included on the Company’s website.
Legislation in the UK governing the preparation
and dissemination of financial statements may
differ from legislation in other jurisdictions.
BPI-001 Accounts.qxp  20/4/07  09:27  Page 42 We have audited the Group and parent company
financial statements (the “financial statements”) of
British Polythene Industries PLC for the year ended 
31 December 2006 which comprise the Consolidated
Income Statement, the Consolidated and Parent
Company Balance Sheets, the Consolidated
Statement of Recognised Income and Expense, 
the Consolidated Cash Flow Statement and the
related notes. These financial statements have been
prepared under the accounting policies set out
therein. We have also audited the information in the
Directors’ Remuneration Report that is described as
having been audited. 
This report is made solely to the Company’s 
members, as a body, in accordance with section 235
of the Companies Act 1985. Our audit work has been
undertaken so that we might state to the Company’s
members those matters we are required to state to
them in an auditor’s report and for no other purpose.
To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than
the Company and the Company’s members as a body,
for our audit work, for this report, or for the opinions
we have formed.
RESPECTIVE RESPONSIBILITIES 
OF DIRECTORS AND AUDITORS
The Directors’ responsibilities for preparing the
Annual Report and the Group financial statements 
in accordance with applicable law and International
Financial Reporting Standards (IFRSs) as adopted 
by the EU, and for preparing the parent company 
financial statements and the Directors’ Remuneration
Report in accordance with applicable law and UK
Accounting Standards (UK Generally Accepted
Accounting Practice) are set out in the Statement 
of Directors’ Responsibilities on page 42.
Our responsibility is to audit the financial statements
and the part of the Directors’ Remuneration Report 
to be audited in accordance with relevant legal and 
regulatory requirements and International Standards
on Auditing (UK and Ireland).
We report to you our opinion as to whether the 
financial statements give a true and fair view and
whether the financial statements and the part of the
Directors’ Remuneration Report to be audited have
been properly prepared in accordance with the
Companies Act 1985 and, as regards the Group
financial statements, Article 4 of the IAS Regulation. 
We also report to you whether in our opinion the
information given in the Directors’ Report is
consistent with the financial statements. 
In addition we report to you if, in our opinion, the
Company has not kept proper accounting records,
if we have not received all the information and
explanations we require for our audit, or if
information specified by law regarding Directors’
remuneration and other transactions is not disclosed.
We review whether the Corporate Governance
Statement reflects the Company’s compliance with
the nine provisions of the 2003 Combined Code
specified for our review by the Listing Rules of the
Financial Services Authority, and we report if it does
not. We are not required to consider whether the
Board’s statements on internal control cover all risks
and controls, or form an opinion on the effectiveness
of the Group’s corporate governance procedures or
its risk and control procedures.
We read the other information contained in the
Annual Report and consider whether it is consistent
with the audited financial statements. We consider
the implications for our report if we become aware 
of any apparent misstatements or material
inconsistencies with the financial statements. 
Our responsibilities do not extend to any 
other information.
BASIS OF AUDIT OPINION
We conducted our audit in accordance with
International Standards on Auditing (UK and Ireland)
issued by the Auditing Practices Board. An audit
includes examination, on a test basis, of evidence
relevant to the amounts and disclosures in the
financial statements and the part of the Directors’ 
Remuneration Report to be audited. It also includes 
an assessment of the significant estimates and
judgments made by the Directors in the preparation 
of the financial statements, and of whether the
accounting policies are appropriate to the Group’s
and Company’s circumstances, consistently applied
and adequately disclosed.
We planned and performed our audit 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 financial statements and the part of the Directors’
Remuneration Report to be audited are free from
material misstatement, whether caused by fraud or
other irregularity or error. In forming our opinion we also
evaluated the overall adequacy of the presentation 
of information in the financial statements and the part
of the Directors’ Remuneration Report to be audited.
OPINION
In our opinion:
– the Group financial statements give a true and
fair view, in accordance with IFRSs as adopted 
by the EU, of the state of the Group’s affairs as 
at 31 December 2006 and of its profit for the
year then ended;
– the Group financial statements have been properly 
prepared in accordance with the Companies Act 
1985 and Article 4 of the IAS Regulation;
– the parent company financial statements give a 
true and fair view, in accordance with UK Generally 
Accepted Accounting Practice, of the state of the 
parent company’s affairs as at 31 December 2006;
– the parent company financial statements and 
the part of the Directors’ Remuneration Report 
to be audited have been properly prepared in 
accordance with the Companies Act 1985; and
– the information given in the Directors’ Report 
is consistent with the financial statements.
KPMG Audit Plc
Chartered Accountants 
Registered Auditor
191 West George Street
Glasgow
G2 2LJ
5 March 2007
INDEPENDENT AUDITORS’ REPORT 
to the members of British Polythene Industries PLC
Independent Auditors’ Report 43
BPI-001 Accounts.qxp  20/4/07  09:27  Page 43 FIVE YEAR RECORD
IFRS IFRS IFRS UKGAAP UKGAAP
2006 2005 2004 2003 2002
£’m £’m £’m £’m £’m 
Income Statement Extracts
Turnover 414.2 410.2 359.4 350.7 350.4
Operating profit before all restructuring costs 17.1 23.3 13.7 17.8 17.5
Profit before tax 14.0 19.7 11.0 11.4 10.2
Diluted earnings per ordinary share 38.46 54.28 31.50 29.36 27.53
Dividend per ordinary share 22.00 22.80 21.00 21.00 21.00
Balance Sheet Extracts
Fixed assets 79.5 81.3 82.1 84.7 86.2
Inventories 59.5 55.3 58.4 49.2 43.7
Trade and other receivables 60.5 63.2 61.9 50.0 55.4
Trade and other payables (61.1) (65.6) (68.8) (60.4) (53.4)
Capital employed 138.4 134.2 133.6 123.5 131.9
Total equity attributable to equity holders of the parent 54.2 37.0 36.0 62.0 56.7
Minority interests 0.2 0.2 0.1 0.1 0.1
Net debt 52.0 47.1 56.7 48.3 63.4
Retirement and other employee benefits 34.7 56.0 44.7 – –
Dividends – –– 3.6 3.6
Taxation (2.7) (6.1) (3.9) 9.5 8.1
138.4 134.2 133.6 123.5 131.9
The main adjustments required to make the UK GAAP comparatives for 2003 and 2002 comply with IFRS relates to the recognition of the retirement and other
employee benefit obligations at the relevant balance sheet dates.
44 Financial Statements
BPI-001 Accounts.qxp  20/4/07  09:27  Page 44 2006 2005
Notes £’m £’m 
Turnover 2, 3 414.2 410.2
Profit from operations 2, 3 17.1 23.3
Borrowing costs 5 (2.8) (3.2)
Net retirement benefit financing 5 (0.3) (0.4)
Net financing costs (3.1) (3.6)
Profit before tax 14.0 19.7
Tax 6 (3.9) (5.4)
Profit for the year 10.1 14.3
Attributable to:
Equity holders of the parent 25 10.1 14.2
Minority interests 27 – 0.1
10.1 14.3
Earnings per share
Basic 8 38.79p 55.20p
Diluted 8 38.46p 54.28p
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
for the year ended 31 December 2006
2006 2005
£’m £’m 
Profit for the year 10.1 14.3 
Cash flow hedges: effective portion of net changes in fair value (0.3) 0.3 
Actuarial gain/(loss) on defined benefit pension scheme 17.4 (11.8) 
Tax on items taken directly to equity (5.2) 3.5 
Movement on translation of overseas undertakings and related borrowings (0.2) 0.2 
Net income/(expense) recognised directly in equity 11.7 (7.8) 
Total recognised income and expense for the year 21.8 6.5 
Attributable to:
Equity holders of the parent 21.8 6.4 
Minority interests – 0.1 
21.8 6.5 
Financial Statements 45
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2006
BPI-001 Accounts.qxp  20/4/07  09:27  Page 45 2006 2005
Notes £’m £’m 
Non-current assets
Goodwill 9 0.3 0.3
Other intangible assets 10 1.8 1.7
Property, plant and equipment 11 77.3 79.2
Investments 12 0.1 0.1
Deferred tax assets 19 5.9 12.2
85.4 93.5
Current assets
Inventories 14 59.5 55.3
Trade and other receivables 15 60.5 63.2
Cash at bank 16 0.5 0.9
120.5 119.4
Current liabilities
Bank overdraft 16 6.4 5.8
Other loans and borrowings 16 1.0 1.0
Trade and other payables 17 60.2 64.9
Current tax liabilities 18 0.7 3.8
68.3 75.5
Net current assets 52.2 43.9
Total assets less current liabilities 137.6 137.4
Non-current liabilities
Other loans and borrowings 16 45.1 41.2
Retirement and employee benefit obligations 31 34.7 56.0
Deferred tax liabilities 19 2.5 2.3
Deferred government grants 20 0.9 0.7
83.2 100.2
Net assets 54.4 37.2
Equity
Issued share capital 22 6.6 6.5
Share premium account 23 25.0 23.8
Other reserves 24 7.4 7.9
Retained earnings 25 15.2 (1.2)
Total equity attributable to equity holders of the parent 54.2 37.0
Minority interests 27 0.2 0.2
Total equity 54.4 37.2
The Financial Statements were approved by the Board of Directors on 5 March 2007 and signed on its behalf by:
C. McLatchie, Chairman A. Thorburn, Finance Director
CONSOLIDATED BALANCE SHEET
at 31 December 2006
46 Financial Statements
BPI-001 Accounts.qxp  20/4/07  09:27  Page 46 2006 2005
Notes £’m £’m 
Profit from operations 17.1 23.3
Amortisation of intangible assets 10 0.4 0.9
Depreciation of property, plant and equipment 11 12.3 12.4
IFRS 2 charge in relation to equity settled transactions 0.3 0.3
Gain on disposal of property, plant and equipment (0.6) (0.9)
Adjustment relating to pensions (4.0) (0.9)
Operating cash flows before movements in working capital 25.5 35.1
(Increase)/decrease in inventories (4.5) 2.7
Decrease/(increase) in trade and other receivables 2.1 (1.4)
Decrease in payables (3.7) (2.6)
Movements in working capital (6.1) (1.3)
Cash generated from operations 19.4 33.8
Interest paid (2.8) (3.2)
Income taxes paid (5.6) (4.0)
Net cash from operating activities 11.0 26.6
Investing activities
Purchase of property, plant and equipment (12.0) (14.0)
Purchase of intangible assets (0.5) (0.3)
Proceeds from sale of property, plant and equipment 0.9 2.7
Net cash used in investing activities (11.6) (11.6)
Net cash flows before financing (0.6) 15.0
Financing activities
Dividends paid 7 (5.7) (5.4)
Net increase/(decrease) in bank loans 5.4 (0.9)
Repayment of obligations under finance leases (1.0) (1.1)
Repurchase of ordinary shares (0.5) (0.4)
Proceeds from the issue of share capital 1.3 0.1
Net cash used in financing activities (0.5) (7.7)
Net (decrease)/increase in cash and cash equivalents (1.1) 7.3
Cash and cash equivalents at beginning of year (4.9) (12.4)
Effect of foreign exchange rate changes 0.1 0.2
Cash and cash equivalents at end of year (5.9) (4.9)
Financial Statements 47
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2006
BPI-001 Accounts.qxp  20/4/07  09:27  Page 47 1. SIGNIFICANT ACCOUNTING POLICIES
British Polythene Industries PLC (the “Company”) is a company domiciled and incorporated in the United Kingdom. The consolidated annual financial statements
(the “financial statements”) of the Company for the year ended 31 December 2006 incorporate the financial statements of the Company and its subsidiaries
(together referred to as the “Group”).
Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU (“adopted IFRSs”).
The Company has elected to prepare its parent company financial statements in accordance with UK GAAP. These are presented on pages 68 to 75.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these consolidated financial statements.
Basis of preparation
The financial statements are prepared on the historical cost basis except for derivative financial instruments and the assets of the defined benefit pension scheme
which are stated at their fair value.
Basis of consolidation
Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating
policies of an entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition 
or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.
All intra-Group transactions, balances, income and expenses are eliminated on consolidation. 
The interest of minority shareholders is stated at the minority’s proportion of the fair values of the assets and liabilities recognised. Subsequently, any losses
applicable to the minority interest in excess of the minority interest are allocated against the interests of the parent.
Turnover recognition
Turnover from the sale of goods and services is measured at the fair value of the consideration, net of rebates, trade discounts, VAT and other sales-related taxes.
Turnover from the sale of goods and services is recognised when the Group has transferred the significant risks and rewards of ownership of the goods and services
to the buyer, the amount of turnover can be measured reliably and it is probable that the economic benefits associated with the transaction will flow to the Group.
Leasing
Leases are classified as finance leases when on inception of the lease the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.
All other leases are classified as operating leases.
Assets held under finance leases are initially recognised as assets of the Group at their fair value or, if lower, at the present value of the minimum lease payments,
each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments
are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability.
Finance charges are charged directly through the income statement as borrowing costs.
Rentals payable under operating leases are charged to the income statement on a straight-line basis over the term of the relevant lease.
Foreign currencies
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date,
monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary assets
and liabilities carried at historical cost that are denominated in foreign currencies are translated at the rates prevailing at the date when the historical cost was
determined. Gains and losses arising on retranslation are included in income and expense for the period.
On consolidation, the assets and liabilities of the Group’s overseas operations, including goodwill and fair value adjustments arising on the acquisition of a foreign
entity, are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period.
Exchange differences arising are recognised directly in the Group’s translation reserve. Such translation differences are recognised as income or as expenses in the
period in which the operation is disposed of.
Government grants
Government grants on capital expenditure are released through cost of sales over the expected useful lives of the relevant assets or the qualifying period if shorter.
Grants of a revenue nature are credited to the consolidated income statement in the period in which the costs are incurred.
48 Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2006
BPI-001 Accounts.qxp  20/4/07  09:27  Page 48 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Retirement and other employee benefit obligations
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due. Payments made to state-managed retirement benefit
schemes are dealt with as payments to defined contribution schemes where the Group’s obligations under the schemes are equivalent to those arising in a defined
contribution retirement benefit scheme.
For defined benefit retirement benefit schemes, the cost of providing benefits in respect of each plan is determined in an annual actuarial report using the Projected
Unit Credit Method. Actuarial gains and losses are recognised in full in the period in which they occur. They are recognised outside the income statement and
presented in the consolidated statement of recognised income and expense in accordance with IAS 19.
The retirement benefit obligation recognised in the balance sheet represents an actuarial assessment of the present value of the defined benefit obligation as
reduced by the fair value of scheme assets.
Service awards and jubilee commitments qualifying as a defined benefit plan are recognised in the Group’s Dutch operating company. These obligations are
provided for by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods. The benefit is
discounted to determine the present value, taking into account factors including years of service. The discount rate applicable to all retirement and other employee
benefit obligations is the yield at the balance sheet date on AA credit rated bonds that have maturity dates approximating to the terms of the obligation.
Taxation
The tax expense represents the sum of the current taxes payable and deferred tax.
The current tax payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of
income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax
is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and
the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available
against which deductible temporary differences can be utilised.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control 
the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable
profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Tax is charged or credited in the
income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
Goodwill
Goodwill has been recognised on acquisitions of subsidiaries and represents the excess of the cost of acquisition over the Group’s interest in the fair value of the
identifiable assets and liabilities and contingent liabilities at the date of acquisition. Goodwill is stated at cost less any accumulated impairment losses. The carrying
amount is allocated to cash-generating units and is tested annually for impairment. Any impairment is recognised immediately in income or expense and is not
subsequently reversed.
In respect of acquisitions prior to 1 January 2004, goodwill is included on the basis of its deemed cost, which represents the amount recorded under previous GAAP.
The classification and accounting treatment of business combinations that occurred prior to 1 January 2004 was not reconsidered in preparing the Group’s opening
IFRS balance sheet at 1 January 2004.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal, except for goodwill written off 
to reserves under UK GAAP prior to 1998 which has not been reinstated and is not included in determining any subsequent profit or loss on disposal.
Negative goodwill arising on an acquisition is recognised directly in the consolidated income statement.
Other intangible assets
Other intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation begins when an asset is available 
for use and is calculated on a straight-line basis to allocate the cost of assets over their estimated useful lives as follows:
Computer software 4-5 years
Customer lists 3-10 years
The cost of intangible assets acquired in a business combination is the fair value at acquisition date. The cost of separately acquired intangible assets, including
computer software, comprises the purchase cost and any directly attributable costs of preparing the asset for use. Computer software costs 
that are directly associated with the implementation of major business systems are capitalised as intangible assets. 
Financial Statements 49
BPI-001 Accounts.qxp  20/4/07  09:27  Page 49 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property, plant and equipment
Items of property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.
Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment.
Land is not depreciated. The estimated useful lives are as follows:
Freehold buildings 20-50 years
Leasehold buildings 10-40 years
Plant and equipment 4-10 years
Residual values and useful lives are reassessed annually.
Assets held under finance leases are capitalised and depreciated over their expected useful lives on the same basis as owned assets or, where shorter, over the term
of the relevant lease.
Impairment of tangible and intangible assets
At each balance sheet date, the Group reviews the carrying amounts of its tangible assets and intangible assets with definite useful lives to determine whether 
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order 
to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates
the recoverable amount of the cash-generating unit to which the asset belongs. Intangible assets with indefinite useful lives and goodwill are tested for impairment
annually and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the
estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. 
An impairment loss is recognised as an expense immediately.
Where an impairment loss subsequently reverses in respect of assets other than goodwill, the carrying amount of the asset is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss
been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads
that have been incurred in bringing the inventories to their present location and condition. Net realisable value represents the estimated selling price less all
estimated costs of completion and costs to be incurred in marketing, selling and distribution.
Trade and other receivables
Trade and other receivables are stated at their amortised cost less an allowance for irrecoverable amounts.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less. Bank overdrafts that are repayable on demand
and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
Trade and other payables
Trade and other payables are stated at amortised cost.
Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an
outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash
flows at a pre-tax rate that reflects current market assessments of the time value of money and, when appropriate, the risks specific to the liability.
Interest
Interest is recognised in income or expense using the effective interest method. Financing fees are set against borrowings and are written off in future 
accounting periods.
50 Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2006
BPI-001 Accounts.qxp  20/4/07  09:27  Page 50 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Derivative financial instruments
Certain derivative financial instruments are designated as hedges in line with the Group’s treasury policy. Hedges are classified as follows:
– Fair value hedges that hedge the exposure to changes in the fair value of a recognised asset or liability.
– Cash flow hedges that hedge exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability 
or a forecasted transaction.
– Net investment hedges that hedge exposure to changes in the value of the Group’s interests in the net assets of foreign operations.
For fair value hedges, any gain or loss from remeasuring the hedging instrument at fair value is recognised in the consolidated income statement. Any gain 
or loss on the hedged item attributable to the hedged risk is adjusted against the carrying amount of the hedged item and similarly recognised in the consolidated
income statement.
For cash flow hedges and net investment hedges, the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge, as defined 
by IAS 39 “Financial Instruments: Recognition and Measurement”, is recognised in equity, with any ineffective portion recognised in the consolidated income
statement. When hedged cash flows result in the recognition of a non-financial asset or liability, the associated gains or losses previously recognised in equity are
included in the initial measurement of the asset or liability. For all other cash flow hedges, the gains or losses that are recognised in equity are transferred to the
consolidated income statement in the same period in which the hedged cash flows affect the consolidated income statement.
Any gains or losses arising from changes in fair value of derivative financial instruments not designated as hedges are recognised in the consolidated income statement.
When a hedging instrument is sold, terminated or exercised, or the entity revokes designation of the hedge relationship but the hedged forecast transaction is still
expected to occur, the cumulative gain or loss at that point remains in equity and is recognised in accordance with the above policy when the transaction occurs. 
If the hedged transaction is no longer expected to take place, the cumulative unrealised gain or loss recognised in equity is recognised immediately in the
consolidated income statement.
Share-based payments
The fair value of equity settled employee share options granted is calculated at grant date and the resulting cost is charged to the income statement over the
vesting period of the options with a corresponding increase in equity. The value of the charge is adjusted to reflect expected and actual levels of options vesting.
Failures to vest as a result of market conditions are not reversed.
Treasury shares
When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a change 
in equity. Repurchased shares are classified as treasury shares and presented as a deduction from revenue reserves.
Key accounting estimates and judgements
The preparation of the financial statements requires the Directors 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 making the judgements about carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Key estimation and judgement areas are as follows:
Asset carrying values
Management annually assesses the carrying value of all material assets across the Group.
Defined benefit pension plans
A qualified independent actuary undertakes the estimation of the present value of the Group’s obligations under defined benefit pension schemes using
assumptions taken from a range of possible actuarial assumptions. These assumptions may not be borne out in practice, especially due to the long timescales
involved. The valuation of scheme assets is based on the fair value at the balance sheet date. As these assets are not intended to be sold in the short-term, 
their value may change significantly prior to realisation.
Taxation
The Group has, from time to time, contingent tax liabilities arising from trading and corporate transaction in the UK and overseas jurisdictions. After taking appropriate
external advice, the Group makes provision for these liabilities based on the probable level of economic loss that may be incurred and which is reliably measurable.
Financial Statements 51
BPI-001 Accounts.qxp  20/4/07  09:27  Page 51 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Adopted IFRS standards and interpretations not yet applied
This financial information has been prepared on the basis of the recognition and measurement requirements of IFRSs in issue that are either adopted by the EU and
effective or available for early adoption, other than the following standards and interpretations with an effective date after the date of these financial statements.
Effective – year ending
International Financial Reporting Standards (IFRS/IAS)
IAS 1 Amendment to IAS 1 – Presentation of Financial Statements: Capital Disclosures 31 December 2007
IFRS 7 Financial Instruments: Disclosures 31 December 2007
IFRS 8 Operating Segments 31 December 2009
International Financial Reporting Interpretations Committee (IFRIC)
IFRIC 8 Scope of IFRS 2 31 December 2007
IFRIC 9 Reassessment of Embedded Derivatives 31 December 2007
The early adoption of these standards and interpretations would not have affected the balance sheet or income statement as they are concerned only with disclosure.
2. TURNOVER AND PROFIT FROM OPERATIONS
An analysis of the Group’s turnover and profit from operations is as follows:
2006 2005
£’m £’m 
Turnover by destination – UK 272.3 276.2
– Other EC 128.4 120.8
– Non EC 13.5 13.2
414.2 410.2
Cost of sales (352.4) (338.7)
Gross profit 61.8 71.5
Distribution costs (16.7) (17.4)
Selling and administration expenses (27.2) (28.7)
(43.9) (46.1)
Profit from operations before employee profit sharing scheme 17.9 25.4
Amount applied to employee profit sharing scheme (0.8) (2.1)
Profit from operations 17.1 23.3
2006 2005
£’m £’m 
Profit from operations is stated after charging/(crediting):
Cost of sales
Depreciation of property, plant and equipment 11.9 12.0
Restructuring costs relating to closures 0.5 1.1
Operating lease charges – plant 1.1 1.2
– buildings 0.6 0.8
Selling and administration expenses
Depreciation of property, plant and equipment 0.4 0.4
Amortisation of computer software 0.4 0.9
Operating lease charges – plant 0.8 0.9
Profit on disposal of closed site (0.5) (0.5)
Profit on disposal of other fixed assets (0.1) (0.4)
Auditors’ remuneration:
Audit of these financial statements 0.1 0.1
Amounts receivable by auditors and their associates in respect of:
– audit of financial statements of subsidiaries pursuant to legislation 0.1 0.1
– other services relating to taxation 0.2 0.2
52 Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2006
BPI-001 Accounts.qxp  20/4/07  09:27  Page 52 3. SEGMENT REPORTING
Segment information is presented in respect of the Group’s geographical and business segments. 
Inter-segment pricing is determined on an arms-length basis.
Segment results, assets and liabilities include items directly attributable to the segment as well as those that can be allocated on a reasonable basis. 
Primary segments – Geographical
The Group operates in two principal geographic regions – “UK & Ireland” and “Continental Europe”. UK & Ireland includes all of the UK manufacturing and
merchanting activities along with the Irish sales offices which distribute predominantly UK manufactured products. It also includes the manufacturing operation in
China from which substantially all of the output is exported for sale by the Group in the UK. Continental Europe comprises the manufacturing and merchanting activities
located in Belgium, Holland and France. These two regions are the basis on which the Group reports its primary segment information.
Segment information about these regions is presented below. 
Segment information by geographic region
Continental
UK & Ireland Europe Eliminations Consolidated
2006 2005 2006 2005 2006 2005 2006 2005
£’m £’m £’m £’m £’m £’m £’m £’m
Turnover
External sales 328.7 330.5 85.5 79.7 – – 414.2 410.2 
Inter-segment sales 1.6 2.3 0.4 0.4 (2.0) (2.7) – – 
Total turnover 330.3 332.8 85.9 80.1 (2.0) (2.7) 414.2 410.2 
Profit from operations 9.7 17.8 7.4 5.5 – – 17.1 23.3 
Net financing costs (3.1) (3.6) 
Profit before tax 14.0 19.7 
Tax (3.9) (5.4) 
Profit for the year 10.1 14.3 
Segment assets 161.3 165.5 44.4 41.9 (6.2) (7.6) 199.5 199.8 
Segment liabilities (84.4) (112.3) (17.6) (16.9) 6.2 7.6 (95.8) (121.6) 
Net segment assets 103.7 78.2 
Net borrowings (52.0) (47.1) 
Taxation 2.7 6.1 
Net assets per balance sheet 54.4 37.2 
Capital expenditure 8.6 11.2 3.1 3.5 11.7 14.7 
Depreciation and amortisation 9.9 10.4 2.8 2.9 12.7 13.3 
Other adjustments to 
operating cash flows (4.3) (1.5) – – (4.3) (1.5) 
Secondary segments – Business
The Group comprises the following principal secondary business segments:
“Films” – Single process of extruded polythene reels
“Converted” – Predominantly two or three stage process of extrusion, print and conversion
“Recycled” – Recycles scrap from group and external sources and converts into predominantly recycled products.
Segment information about these businesses is presented below. 
External sales Segment assets Capital expenditure
2006 2005 2006 2005 2006 2005
£’m £’m £’m £’m £’m £’m
Segment information by business segment
Films 161.4 160.8 78.7 77.1 2.0 4.4 
Converted 177.4 175.8 92.5 98.1 4.4 8.3 
Recycled 75.4 73.6 34.5 32.2 5.3 2.0 
Eliminations – – (6.2) (7.6) – – 
414.2 410.2 199.5 199.8 11.7 14.7 
Financial Statements 53
BPI-001 Accounts.qxp  20/4/07  09:27  Page 53 4. STAFF COSTS
2006 2005
Number Number
The average number of employees (including Executive Directors) was:
Production 2,461 2,485
Administration 193 207
Selling 220 241
2,874 2,933
2006 2005
£’m £’m 
Employee costs:
Wages and salaries 62.9 64.3
Employee profit sharing scheme 0.8 2.1
Social security costs 7.3 7.4
Defined contribution pension scheme costs 1.1 1.1
Defined benefit pension scheme – current service cost 3.0 2.6
75.1 77.5
Wages and salary costs are inclusive of redundancy costs.
Details of Directors’ remuneration and shareholdings are shown on pages 36 to 40.
5. FINANCING COSTS
2006 2005
£’m £’m 
Interest on bank loans and overdrafts 1.4 1.6
Interest on other loans 1.3 1.4
Interest on obligations under finance lease 0.1 0.2
Borrowing costs 2.8 3.2
Expected return on pension scheme assets (9.4) (8.7)
Interest on pension liabilities 9.7 9.1
Net retirement benefit financing 0.3 0.4
Net financing costs 3.1 3.6
6. TAX ON PROFIT ON ORDINARY ACTIVITIES
2006 2005
£’m £’m 
Recognised in the income statement
Current tax expense
UK current tax at 30% on the profits of the year 
Current year 0.7 3.8
Adjustments for prior years (0.9) (0.3)
(0.2) 3.5
Overseas current tax
Current year 2.5 2.3
Adjustments for prior years 0.3 (0.3)
2.8 2.0
2.6 5.5
Deferred tax expense
Origination of temporary differences 1.2 0.1
Adjustments for prior years 0.1 (0.2)
1.3 (0.1)
Total tax expense in income statement 3.9 5.4
54 Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2006
BPI-001 Accounts.qxp  20/4/07  09:27  Page 54 6. TAX ON PROFIT ON ORDINARY ACTIVITIES (CONTINUED)
Factors affecting the income tax expense for the current period
The difference between the income tax expense for the period and the standard rate of corporation tax in the UK is explained below:
2006 2006 2005 2005
% £’m % £’m 
Reconciliation of effective tax rate
Profit before tax 14.0 19.7 
Current tax at 30% 30.0% 4.2 30.0% 5.9 
Non-deductible expenses 0.7% 0.1 0.5% 0.1 
Depreciation on ineligible assets 0.7% 0.1 0.5% 0.1 
Overseas tax rates 1.4% 0.2 1.0% 0.2 
Capital gains/losses -1.4% (0.2) -0.5% (0.1) 
Adjustments for prior years -3.6% (0.5) -4.0% (0.8) 
Total tax expense in income statement 27.8% 3.9 27.5% 5.4 
Deferred tax charge/(credit) recognised directly in equity
Relating to retirement and employee benefits 5.2 (3.5) 
7. DIVIDENDS
2006 2005
£’m £’m
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 December 2005 of 15.0p per share (2004 – 14.0p) 3.9 3.6 
Interim dividend for the year ended 31 December 2006 of 7.0p per share (2005 – 7.0p) 1.8 1.8 
5.7 5.4 
Proposed final dividend for the year ended 31 December 2006 of 15.0p per share (2005 – 15.0p) 4.0 3.9 
The proposed final dividend is to be approved by shareholders at the Annual General Meeting on 10 May 2007 and has not been included as a liability 
as at 31 December 2006.
8. EARNINGS PER ORDINARY SHARE
The calculation of basic and diluted earnings per share at 31 December 2006 was based on the profit attributable to ordinary shareholders of £10.1 million 
(2005 – £14.2 million).
Diluted earnings per share is calculated below:
2006 2005
000s 000s
Weighted average number of ordinary shares
Issued ordinary shares at 1 January 25,894 25,864 
Effect of shares issued 367 22 
Effect of own shares held (221) (160) 
Weighted average number of ordinary shares 26,040 25,726 
Effect of share options and long-term incentive plan shares in issue 220 433 
Diluted weighted average number of ordinary shares 26,260 26,159 
9. GOODWILL
£’m
At 31 December 2005 and 31 December 2006 0.3
Goodwill has been tested for impairment in accordance with IAS 36 “Impairment of Assets” at 31 December 2005 and 31 December 2006 and no impairments have
been identified.
Financial Statements 55
BPI-001 Accounts.qxp  20/4/07  09:27  Page 55 10. OTHER INTANGIBLE ASSETS
Customer Computer Computer 
lists software Total software
2006 2006 2006 2005
£’m £’m £’m £’m 
Cost
Balance at 1 January – 5.2 5.2 6.2
Additions 0.3 0.2 0.5 0.3
Disposals ––– (1.3)
Balance at 31 December 0.3 5.4 5.7 5.2
Amortisation
Balance at 1 January – 3.5 3.5 3.9
Amortisation charge in the year – 0.4 0.4 0.9
Disposals ––– (1.3)
Balance at 31 December – 3.9 3.9 3.5
Carrying amount at 31 December 0.3 1.5 1.8 1.7
Carrying amount at 1 January – 1.7 1.7 2.3
11. PROPERTY, PLANT & EQUIPMENT
Land and Plant and Land and Plant and 
buildings equipment Total buildings equipment Total
2006 2006 2006 2005 2005 2005
£’m £’m £’m £’m £’m £’m 
Cost
Balance at 1 January 44.5 227.3 271.8 46.6 224.2 270.8
Effect of movements in foreign exchange (0.5) (1.8) (2.3) – (0.3) (0.3)
Additions 0.9 10.6 11.5 0.6 13.8 14.4
Disposals (0.5) (4.2) (4.7) (2.7) (10.4) (13.1)
Balance at 31 December 44.4 231.9 276.3 44.5 227.3 271.8
Depreciation 
Balance at 1 January 15.5 177.1 192.6 15.2 176.2 191.4
Effect of movements in foreign exchange (0.1) (1.4) (1.5) –0.1 0.1
Depreciation charge for the year 1.2 11.1 12.3 1.2 11.2 12.4
Disposals (0.2) (4.2) (4.4) (0.9) (10.4) (11.3)
Balance at 31 December 16.4 182.6 199.0 15.5 177.1 192.6
Carrying amount at 31 December 28.0 49.3 77.3 29.0 50.2 79.2
Carrying amount at 1 January 29.0 50.2 79.2 31.4 48.0 79.4
The carrying amount of plant and equipment includes £2.8 million (2005 – £3.6 million) in respect of assets held under finance leases.
Capital commitments at 31 December 2006 were as follows:
2006 2005
£’m £’m 
Contracts placed for future capital expenditure relating to plant and equipment
not provided in the financial statements 6.1 5.8
12. INVESTMENTS
At 31 December 2005 and 31 December 2006, the Group held external investments totalling £0.1 million.
56 Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2006
BPI-001 Accounts.qxp  20/4/07  09:27  Page 56 13. SUBSIDIARY UNDERTAKINGS
Except as indicated below, the Company owns the whole issued share capital of all subsidiary undertakings. The principal subsidiary undertakings are as follows:
Company Country of incorporation Trade
British Polythene Limited England Polythene Manufacturer
BPI plc England Property Company
BPI Europe BV* Netherlands Holding Company
Combipac BV* Netherlands Polythene Manufacturer
Formipac France SA* France Distribution Company
Irish Polythene Industries Limited Republic of Ireland Distribution Company
Venture Hong Kong Limited (75% owned)* Hong Kong Holding Company
Xinhui Alida Polythene Limited + China Polythene Manufacturer
* Shares held through an intermediate holding company
+ 20% owned through a subsidiary undertaking
14. INVENTORIES
2006 2005
£’m £’m 
Raw materials 16.3 15.2
Work in progress 3.7 3.8
Finished goods 39.5 36.3
59.5 55.3
Cost of sales includes the effect of movements in stock provisions totalling £0.8 million (2005 – £0.7 million).
15. TRADE AND OTHER RECEIVABLES
2006 2005
£’m £’m 
Trade debtors 58.3 61.3
Prepayments and accrued income 1.5 1.1
Other debtors 0.7 0.8
60.5 63.2
An allowance has been made for estimated irrecoverable amounts from the sale of goods of £1.4 million (2005 – £1.5 million). 
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
Credit risk
The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties and customers.
16. BANK AND OTHER BORROWINGS
2006 2005
£’m £’m 
Bank overdrafts 6.4 5.8
Bank loans 24.1 19.1
Other loan 20.0 20.0
Finance leases 2.0 3.1
52.5 48.0
Represented by:
Amounts falling due within one year 7.4 6.8
Amounts falling due after more than one year 45.1 41.2
52.5 48.0
Financial Statements 57
BPI-001 Accounts.qxp  20/4/07  09:27  Page 57 16. BANK AND OTHER BORROWINGS (CONTINUED)
Less than Between Between 5 years 
1 year 1-2 years 2-5 years or more Total
£’m £’m £’m £’m £’m 
Maturity 2006
Cash at bank (0.5) – – – (0.5)
Bank overdrafts 6.4 – – – 6.4
Cash and cash equivalents in the cash flow statement 5.9 – – – 5.9
Bank loans – – 24.1 – 24.1
Other loans – – 20.0 – 20.0
Finance leases 1.0 1.0 – – 2.0
6.9 1.0 44.1 – 52.0
Less than Between Between 5 years 
1 year 1-2 years 2-5 years or more Total
£’m £’m £’m £’m £’m 
Maturity 2005
Cash at bank (0.9) – – – (0.9)
Bank overdrafts 5.8 – – – 5.8
Cash and cash equivalents in the cash flow statement 4.9 – – – 4.9
Bank loans –– 19.1 – 19.1
Other loans – – 20.0 – 20.0
Finance leases 1.0 1.0 1.1 – 3.1
5.9 1.0 40.2 – 47.1
Undrawn facilities
Bank overdrafts 25.7 – – – 25.7
Bank loans – – 13.4 – 13.4
Total facilities 32.5 1.0 53.6 – 87.1
Fixed Floating Cash at 
rate rate bank Total Total
2006 2006 2006 2006 2005
Notes £’m £’m £’m £’m £’m 
Currency and interest rate profile
Currency 
Sterling placement 1 20.0 – – 20.0 20.0
Sterling 2 –3.2 –3.2 (1.9)
Euro 2 – 26.6 (0.1) 26.5 27.0
Other 2 – 2.7 (0.4) 2.3 2.0
20.0 32.5 (0.5) 52.0 47.1
1. 10 year unsecured fixed-term facility with a major financial institution at a fixed interest rate of 6.73%.
2. The floating rate borrowings are all rolled over on periods of three months or less based on the appropriate LIBOR rate.
Financial assets
Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three months or less. The carrying amount 
of these assets approximates their fair value.
Hedging
Net investment in overseas operations
The Group has a policy of maintaining borrowings in the currency of most of its overseas operations to cover the net asset position in those companies. 
Cash flow hedge – foreign currency
Sales orders in currency are covered in most instances at the time of receipt by the creation of a currency overdraft. Purchases are covered with forward contracts 
or reduction in borrowings in the relevant currency where appropriate. Any significant exception to this is approved at Board level. Any cash flow and profit effect
would crystalise within six months of the year end when the forecast transactions being hedged materialise. The value of these hedges at 31 December 2006 was
£nil (2005 – £nil). 
Cash flow hedge – gross margin
In certain market sectors the risk of compression of gross margin caused by short-term fluctuations in raw material prices is covered on the London Metal Exchange.
The Board have approved maximum levels of trading to be hedged in this manner on this fledgling market. Any cash flow and profit effect would crystalise within six
months of the year end when the forecast transactions being hedged materialise. The value of these hedges at 31 December 2006 was £nil (2005 – £0.3 million). 
58 Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2006
BPI-001 Accounts.qxp  20/4/07  09:27  Page 58 16. BANK AND OTHER BORROWINGS (CONTINUED)
Carrying Fair Carrying Fair
amount value amount value
2006 2006 2005 2005
£’m £m £’m £m 
Fair Values
Fixed asset investment 0.1 0.1 0.1 0.1 
Fixed rate borrowings – other loans (20.0) (19.7) (20.0) (20.2) 
(19.9) (19.6) (19.9) (20.1) 
Investments
The fair value of investments is based on estimates of likely sales values of the investments.
Cash at bank, borrowings due within one year, floating rate borrowings due after more than one year, trade creditors, trade debtors and other
current liabilities 
The carrying value approximates to fair value either because of the short maturity of the instruments or because the interest rates are reset after periods 
of not greater than six months.
Fixed rate borrowings
The fair value is based on the quoted market prices of comparable debt issued by other companies.
Interest rate management
Exposure to fluctuating interest rates is managed by maintaining a proportion of the Group’s debt on a fixed basis and topping this up as appropriate 
with derivative financial instruments to maintain the desired fixed/variable mix. Due to the seasonal nature of working capital requirements funded by borrowings
this is done by fixing a value rather than a percentage. 
Sensitivity analysis
In managing interest rate and currency risks the Group aims to reduce the impact of short-term fluctuations on the Group’s earnings. Over the longer-term, 
however, permanent changes in foreign exchange and interest rates would have an impact on consolidated earnings.
At 31 December 2006, it is estimated that an increase of one percentage point in global interest rates would decrease the Group’s profit before tax 
by approximately £0.3 million. 
It is estimated that an increase of one percentage point in the value of sterling against other foreign currencies (mainly the Euro) would decrease the Group’s profit
before tax by approximately £0.1million. 
17. TRADE AND OTHER PAYABLES
2006 2005
£’m £’m 
Trade creditors 48.3 49.5
Other taxes and social security 5.4 5.0
Accruals and deferred income 2.2 2.4
Other creditors 4.3 8.0
60.2 64.9
The Directors consider that the carrying amount of trade payables approximates to their fair value.
18. CURRENT TAX LIABILITIES
2006 2005
£’m £’m 
Corporation tax 0.7 3.8
The current tax liability represents the estimated amount of income taxes payable in respect of current and prior periods.
Financial Statements 59
BPI-001 Accounts.qxp  20/4/07  09:27  Page 59 19. DEFERRED TAX
The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during the current and prior reporting period.
Accelerated Other Accelerated Other
capital Employee timing capital Employee timing
allowances benefits differences Total allowances benefits differences Total
2006 2006 2006 2006 2005 2005 2005 2005
£’m £’m £’m £’m £’m £’m £’m £’m
At 1 January 6.7 (16.5) (0.1) (9.9) 7.1 (13.1) (0.2) (6.2)
Charge/(credit) to income –1.3 –1.3 (0.3) 0.1 0.1 (0.1)
Charge/(credit) to equity –5.2 –5.2 – (3.5) – (3.5)
Exchange differences –––– (0.1) – – (0.1)
At 31 December 6.7 (10.0) (0.1) (3.4) 6.7 (16.5) (0.1) (9.9)
Deferred tax liabilities 2.2 – 0.3 2.5 2.2 (0.2) 0.3 2.3
Deferred tax assets 4.5 (10.0) (0.4) (5.9) 4.5 (16.3) (0.4) (12.2)
6.7 (10.0) (0.1) (3.4) 6.7 (16.5) (0.1) (9.9)
Accelerated capital allowances relate to property, plant and equipment and computer software.
Certain deferred tax assets and liabilities have been offset where the Group has a legally enforceable right to set off current tax assets against current tax liabilities
and where the deferred tax assets and liabilities relate to income taxes levied by the same tax jurisdictions.
20. GOVERNMENT GRANTS
Government grants relate primarily to regional selective assistance received upon the achievement of certain job creation and job protection targets. 
The grants could be repayable in the event that numbers employed at the relevant sites drop below these target levels during a specified monitoring period.
21. OBLIGATIONS UNDER FINANCE LEASE
Minimum Minimum 
lease Finance lease Finance
payments costs Capital payments costs Capital
2006 2006 2006 2005 2005 2005
£’m £’m £’m £’m £’m £’m 
Amounts payable under finance lease:
Less than one year 1.1 0.1 1.0 1.1 0.1 1.0 
Between one and five years 1.1 0.1 1.0 2.2 0.1 2.1 
2.2 0.2 2.0 3.3 0.2 3.1 
Capital represents the carrying value of a five year finance lease, repayable by quarterly instalment and excludes contingent rents for future finance costs calculated 
by reference to EURIBOR on each quarterly payment date.
All lease obligations are denominated in Euros.
The fair value of the Group’s lease obligations approximates their carrying amount.
60 Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2006
BPI-001 Accounts.qxp  20/4/07  09:27  Page 60 22. SHARE CAPITAL
2006 2005
£’m £’m 
Authorised
Equity
80,227,336 (2005 – 80,227,336) ordinary shares of 25p each 20.1 20.1
Allotted called up and fully paid
Equity
26,461,762 (2005 – 25,894,393) ordinary shares of 25p each 6.6 6.5
Average 2006 Average 2005
Date of purchase Number Date of purchase Number
issue price of shares issue price of shares
Movements in equity share capital
At 1 January 25,894,393 25,863,976
Exercise of Executive Share Options Various £2.25 435,000
Exercise of SAYE options Various £2.66 132,369 Various £2.73 30,417
At 31 December 26,461,762 25,894,393
The Company has one class of ordinary shares which carries no right to fixed income. The holders of ordinary shares are entitled to receive dividends as declared from
time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regards to the Company’s residual assets. The Company
has granted options over its ordinary shares (see note 30).
23. SHARE PREMIUM ACCOUNT
2006 2005
£’m £’m 
At 1 January 23.8 23.7
On shares issued 1.2 0.1
At 31 December 25.0 23.8
24. OTHER RESERVES
Foreign
Capital currency Total
redemption Capital Hedging translation other
reserve reserve reserve reserve reserves
£’m £’m £’m £’m £’m 
At 1 January 2006 7.2 0.5 0.3 (0.1) 7.9
Movement during the year – – (0.3) – (0.3)
Movement on retranslation of overseas operations – – – (0.2) (0.2)
At 31 December 2006 7.2 0.5 – (0.3) 7.4
Foreign
Capital currency Total
redemption Capital Hedging translation other
reserve reserve reserve reserve reserves
£’m £’m £’m £’m £’m 
At 1 January 2005 7.2 0.5 – (0.3) 7.4
Created during the year – – 0.3 – 0.3
Movement on retranslation of overseas operations – – – 0.2 0.2
At 31 December 2005 7.2 0.5 0.3 (0.1) 7.9
Capital redemption reserve was created on the repurchase and cancellation of ordinary and preference shares in previous years.
Capital reserve was created on the acquisition of a subsidiary.
Hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to forecast hedging
transactions that have not yet occurred.
Foreign currency translation reserve comprises all foreign exchange differences arising from the retranslation of financial statements of foreign operations, 
as well as the translation of liabilities that hedge the Company’s net investment in foreign operations. 
Financial Statements 61
BPI-001 Accounts.qxp  20/4/07  09:27  Page 61 25. RETAINED EARNINGS
2006 2005
£’m £’m 
At 1 January (1.2) (1.6)
Profit for the year 10.1 14.2
Dividends to shareholders (5.7) (5.4)
Actuarial gains/(losses) on defined benefit pension schemes 17.4 (11.8)
Tax on items taken directly to equity (5.2) 3.5
Increase in own shares held (0.5) (0.2)
Movement relative to shares vested under the restricted share plan – (0.2)
IFRS 2 charge in relation to equity settled transactions 0.3 0.3
At 31 December 15.2 (1.2)
26. OWN SHARES HELD
2006 2005
£’m £’m 
Cost of own shares held
At 1 January 0.8 0.6
Shares purchased 0.5 0.4
Movement relative to shares vested under the restricted share plan – (0.2)
At 31 December 1.3 0.8
The cost of own shares held represents shares held by the British Polythene Industries Employee Share Ownership Trust to satisfy the Company’s liabilities under the
restricted share plan and the long-term incentive plan. The market value of the shares is £1.4 million (2005 £1.0 million).
Date of Average Date of Average
purchase/ purchase Number purchase/ purchase Number
allocation price of shares allocation price of shares
2006 2006 2006 2005 2005 2005
Movements in the numbers of shares held
At 1 January 208,581 189,461 
No of shares allocated to employees Various (8,125) Various (77,760) 
Shares purchased Various £4.27 100,000 Various £4.14 96,880 
At 31 December 300,456 208,581 
27. MINORITY INTERESTS
2006 2005
£’m £’m 
At 1 January 0.2 0.1
Share in profit for the period – 0.1
At 31 December 0.2 0.2
Minority interests comprise a 25% holding in the ordinary share capital of Venture Hong Kong Limited, along with the related share in the results of the company up 
to 31 December 2006 as adjusted to reflect Group accounting policies. Venture Hong Kong Limited holds a 20% minority interest in Xinhui Alida Polythene Limited. 
62 Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2006
BPI-001 Accounts.qxp  20/4/07  09:27  Page 62 28. OPERATING LEASE ARRANGEMENTS
At 31 December, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
Plant and Plant and
equipment Buildings Total equipment Buildings Total
2006 2006 2006 2005 2005 2005
£’m £’m £’m £’m £’m £’m 
Less than one year 1.9 0.9 2.8 1.9 0.9 2.8 
Between one and five years 3.1 1.7 4.8 2.9 1.4 4.3 
More than five years – 1.7 1.7 – 1.9 1.9 
5.0 4.3 9.3 4.8 4.2 9.0 
None of the operating leases include contingent rentals.
A number of the leased buildings have been sublet to external tenants. 
At 31 December, the Group expects to receive future sublease rentals which fall due as follows:
Buildings Buildings
2006 2005
£’m £’m 
Less than one year 0.4 0.4 
Between one and five years 0.5 0.3 
0.9 0.7 
During the year ended 31 December 2006, £2.5 million (2005 – £2.9 million) was recognised as an expense in the consolidated income statement in respect 
of operating leases, comprising £2.9 million (2005 – £3.3 million) operating lease rentals less £0.4 million (2005 – £0.4 million) sublease rentals.
29. CONTINGENT LIABILITIES
On 30 June 2006 we announced that the European Commission have decided to close the files on the original investigation into anti-competitive activities
in Industrial Film.
Contingent liabilities of the Group in respect of indemnities amount to £0.8 million (2005 – £0.8 million).
Financial Statements 63
BPI-001 Accounts.qxp  20/4/07  09:27  Page 63 30. SHARE BASED PAYMENTS
Equity-settled share option plan
The Group plan provides for a grant price equal to the quoted market price of the Group shares on the date of grant. All options under this plan were granted on 
22 March 2003 at £2.25 and there are no plans to grant further options under this plan. The vesting period is three years with the possibility to retest after four or five
years. All options granted under this scheme were exercised during the year following the achievement of the targets in 2005. These options were subject to growth
over a three year period in the basic EPS before exceptional items compared with the rate of inflation. No part of an option would be exercisable unless growth in
EPS exceeded that of the Retail Price Index (“RPI”) by at least 9%. At the minimum level 50% of an option would vest, with full vesting at 15% above RPI. If the minimum
level had not been achieved in the three year period, the performance period would have been extended to four and then five years, with an addition of 3% to the
minimum and 5% to full vesting targets for each additional year.
Long-term incentive plan
In 2005 the Group introduced a new Long-Term Incentive Plan for senior executives. Shares are conditionally awarded under this plan and vest in employees based
on performance criteria set out below.
The EPS part of an award will vest if the Company’s EPS growth is at least RPI plus 10% per annum over the performance period; no shares will vest if EPS growth 
is not at least RPI plus 3% per annum. For performance between these two points, vesting will occur on a sliding scale.
For the portion of the award based on Total Shareholder Return (“TSR”), no vesting will occur for ranking below median. At the median 10% of the award will vest 
with the full 50% vesting for a ranking at or above the upper quartile. Vesting occurs on a sliding scale between these two points.
Savings related share option scheme
The employee savings related share option scheme is open to almost all employees. The recognition and measurement principles in IFRS 2 have not been applied as
permitted by IFRS 1 to grants of options under the scheme prior to 7 November 2002. These grants were at a price equal to the market price on the date of grant.
Employees save over a three or five year period at the end of which period shares can be purchased during the following six month period. During the period the
Group issued 132,369 shares (2005 – 30,417 shares) shares at a weighted average price of £2.66 (2005 – £2.73) under this scheme. A new grant of options was
made on the 19 October 2006 over similar periods at a price 10% below the market price on the date of grant.
2006 2006 2005 2005
LTIP Options LTIP Options
Outstanding at beginning of year 335,000 435,000 – 585,000
Granted during the year 173,250 – 337,500 –
Exercised during the year (435,000)
Forfeited during the year (8,750) – (2,500) (150,000)
Outstanding at the end of the year 499,500 – 335,000 435,000
Exercisable at the end of the year –– ––
At 31 December 2006 the individual options, not yet exercised, of Directors and other employees under the savings related share option scheme are as follows:
Date from
Date which Expiry Option Other
of grant exercisable date price Directors employees Total
Savings Related Scheme 10/10/2001 01/12/2006 31/05/2007 266.16p 0 44,518 44,518
Savings Related Scheme 19/10/2006 01/12/2009 31/05/2010 369.45p 2,557 150,937 153,494
Savings Related Scheme 19/10/2006 01/12/2011 31/05/2012 369.45p 8,864 227,778 236,642
11,421 423,233 434,654
A charge for all of these schemes has been based upon the Binomial model and the inputs into the model are as follows:
SAYE LTIP LTIP Options
Year of Grant 2006 2006 2005 2003
Share price £4.46 £4.61 £3.59 £2.25
Weighted average exercise price £4.014 Nil Nil £2.25
Expected volatility 24.79% 18.94% 20.23% 33.56%
Expected life 3/5 years 3 years 3 years 5 years
Risk-free rate 4.88% 4.15% 4.54% 3.72%
Expected dividends 4.93% 4.55% 5.85% 9.33%
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the three years immediately preceding grant. 
The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, 
and behavioural considerations.
The Group recognised total expenses of £0.3 million relating to equity-settled share-based payment transactions in 2006 (2005 – £0.3 million).
64 Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2006
BPI-001 Accounts.qxp  20/4/07  09:27  Page 64 31. RETIREMENT AND EMPLOYEE BENEFIT OBLIGATIONS
Non-current Non-current 2006 Non-current Non-current 2005
assets liabilities Total assets liabilities Total
£’m £’m £’m £’m £’m £’m
Deficit in British Polythene defined benefit pension scheme – (33.2) (33.2) – (54.3) (54.3) 
Other employee benefit obligations (see below) – (1.5) (1.5) – (1.7) (1.7) 
Retirement and employee benefit obligations – (34.7) (34.7) – (56.0) (56.0) 
Related deferred tax asset (note 19) 10.0 – 10.0 16.3 0.2 16.5 
10.0 (34.7) (24.7) 16.3 (55.8) (39.5) 
Defined contribution scheme
The assets of the defined contribution section of the British Polythene Pension Scheme and other insured schemes are held separately from those of the Group,
being invested in funds under the control of a number of insurance companies. The pension charge includes contributions payable by the Group to the various
insurance companies. One of the Company’s overseas subsidiaries operates a defined benefit scheme in conjunction with a number of other employers. However 
as each employer participating in the scheme is unable to identify its share of the underlying assets and liabilities on a consistent and reliable basis, the Group is
accounting for this scheme as a defined contribution scheme.
The total cost charged to income in 2006 of £1.1 million (2005 – £1.1 million) represents contributions payable to these schemes by the Group at rates specified 
in the rules of the plans. 
Defined benefit schemes
The assets of the defined benefit section of the British Polythene Pension scheme are invested in a self-administered trust fund and hence are also separated from
the Group’s business assets. The scheme was closed to new entrants in June 2000.
The Company’s subsidiary in Ireland operates a defined benefit scheme. Disclosures are not provided in relation to this scheme as the amounts involved are not
significant. The scheme has total assets of m3.1 million and total liabilities of m2.9 million at 31 December 2006. 
A full actuarial valuation in relation to the defined benefit pension scheme in the UK was carried out on 6 April 2005 and was updated by the actuary at 
31 December 2005 and 2006. The present value of the defined benefit obligation, the related current service cost and past service cost were measured using 
the projected unit credit method.
The major assumptions used by the actuary in the valuations were:
2006 2005
Rate of increase in pensionable earnings 2.80% 2.60%
Rate of increase in pensions in payment and deferred pensions 2.80% 2.60%
Discount rate applied to scheme liabilities 5.10% 4.70%
Inflation assumption 2.80% 2.60%
Life expectancy:
Male aged 60 (current life expectancy) 20.3 20.3 
Female aged 60 (current life expectancy) 23.3 23.3 
Male aged 45 (life expectancy at age 60) 23.0 23.0 
Female aged 45 (life expectancy at age 60) 26.0 26.0 
The assumptions used by the actuary are the best estimates chosen from a range of possible actuarial assumptions which, due to the timescale covered, may not
necessarily be borne out in practice.
Financial Statements 65
BPI-001 Accounts.qxp  20/4/07  09:27  Page 65 31. RETIREMENT AND EMPLOYEE BENEFIT OBLIGATIONS (CONTINUED)
Net pension liability
The amount included in the consolidated balance sheet at 31 December 2006 arising from the Group’s obligations in respect of its defined benefit pension scheme 
in the UK is as follows:
Long-term Long-term
rate of rate of 
return + return +
31 Dec 06 31 Dec 06 31 Dec 05 31 Dec 05
£’m £’m
Equities 7.50% 110.5 7.10% 102.3 
Corporate bonds 5.10% 30.4 4.75% 24.9 
Government securities 4.10% 28.6 4.10% 27.3 
Fair value of scheme assets 169.5 154.5 
Present value of scheme liabilities (202.7) (208.8) 
Deficit in the scheme (33.2) (54.3) 
Related deferred tax asset 10.0 16.3 
Net pension liability (23.2) (38.0)
+ The rates quoted are the expected net rate of return after allowing for investment expenses.
The fair value of the scheme assets are not intended to be realised in the short-term and may be subject to significant change before they are realised. 
The present value of the scheme liabilities is derived from cash flow projections over long period and is thus inherently uncertain.
The expected rate of return on each class of scheme assets is based on market expectations, as at 31 December 2006. For equities it has been assumed that the
long-term return will exceed that of bonds by a margin, the “equity risk premium”, of 3% p.a. above long-term gilt yields at the measurement date.
Movements in the present value of scheme liabilities were as follows:
2006 2005
£’m £’m
At 1 January 208.8 172.8 
Current service cost 3.0 2.6 
Interest on pension liabilities 9.7 9.1 
Contributions from scheme members 1.1 1.3 
Experience gains and losses arising on scheme liabilities (2.2) 3.4 
Changes in assumptions underlying the present value of scheme liabilities (9.8) 24.6 
Benefits paid (7.9) (5.0) 
At 31 December 202.7 208.8 
Movements in the present value of fair value of scheme assets were as follows:
2006 2005
£’m £’m
At 1 January 154.5 129.8 
Expected return on scheme assets 9.4 8.7 
Actual return less expected return on scheme assets 5.4 16.2 
Employer contributions 7.0 3.5 
Contributions from the scheme members 1.1 1.3 
Benefits paid (7.9) (5.0) 
At 31 December 169.5 154.5 
66 Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2006
BPI-001 Accounts.qxp  20/4/07  09:27  Page 66 31. RETIREMENT AND EMPLOYEE BENEFIT OBLIGATIONS (CONTINUED)
The movements in the scheme deficit were as follows:
2006 2005
£’m £’m £’m £’m
Deficit in scheme at 1 January (54.3) (43.0) 
Current service cost (3.0) (2.6) 
Total amount charged to profit from operations (3.0) (2.6) 
Expected return on pension scheme assets 9.4 8.7 
Interest on pension liabilities (9.7) (9.1) 
Total amount credited to net financing costs (0.3) (0.4) 
Amount charged to income statement (3.3) (3.0) 
Employer contributions 7.0 3.5 
Actual return less expected return on scheme assets 5.4 16.2 
Experience gains and losses arising on scheme liabilities 2.2 (3.4) 
Changes in assumptions underlying the present value of scheme liabilities 9.8 (24.6) 
Actuarial gain/(loss) 17.4 (11.8) 
Deficit in scheme at 31 December (33.2) (54.3)
Of the charge to profit from operations for the year ended 31 December 2006, £2.2 million (2005 – £1.8 million) has been included in cost of sales and £0.8 million
(2005 – £0.8 million) has been included in administrative expenses. 
Experience adjustments
The five year history of experience adjustments is as follows:
2006 2005 2004 2003 2002
£’m £’m £’m £’m £’m
Actual return on scheme assets 14.8 24.9 11.2 18.1 (21.1) 
Present value of scheme liabilities (202.7) (208.8) (172.8) (154.1) (144.0) 
Fair value of scheme assets 169.5 154.5 129.8 118.7 99.7 
Deficit in the scheme (33.2) (54.3) (43.0) (35.4) (44.3) 
Experience adjustments on scheme liabilities 2.2 (3.4) 1.6 1.4 (1.7) 
Percentage of scheme liabilities (%) 1.1% 1.6% 0.9% 0.9% 1.2%
Experience adjustments on scheme assets 5.4 16.2 2.8 11.1 (30.2) 
Percentage of scheme assets (%) 3.2% 10.5% 2.2% 9.4% 30.3%
The Group expects to pay approximately £8.5 million to the scheme during 2007.
Other employee benefits
The Group has two other arrangements classified as other long-term benefits. In the UK there is a self-insured Permanent Health Scheme and in the Netherlands
there is a ‘’Jubilee’’ provision which provides for additional payments to employees with long service. The Group has recognised liabilities of £1.0 million 
(2005 – £1.1 million) and £0.5 million (2005 – £0.6 million) respectively in relation to these arrangements.
32. RELATED PARTY TRANSACTIONS
The Group has a related party relationship with its subsidiaries (see note 13), with its Directors and executive officers including key management personnel, 
and with the British Polythene Pension Scheme. Disclosures relating to Directors are shown on pages 36 to 40.
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. 
There were no trading transactions with related parties who are not members of the Group in the year ended 31 December 2006.
Remuneration of key management personnel 
The remuneration of the key management personnel of the Group is set out below in aggregate for each of the categories specified in IAS 24 “Related Party Disclosures”.
2006 2005
£’m £’m
Short-term employee benefits 2.2 2.8 
Post-employment benefits 0.2 0.3 
Other long-term benefits 0.2 0.2 
2.6 3.3 
Financial Statements 67
BPI-001 Accounts.qxp  20/4/07  09:27  Page 67 2006 2005
Notes £’m £’m 
Fixed assets
Investments 3 137.3 136.7
Current assets
Debtors 4 26.8 25.8
Creditors – amounts falling due within one year
Bank and other borrowings 5 3.1 7.0
Other creditors 6 10.3 7.9
13.4 14.9
Net current assets 13.4 10.9
Total assets less current liabilities 150.7 147.6
Creditors – amounts falling due after more than one year
Bank and other borrowings 7 44.1 39.1
Amounts due to subsidiary undertakings 31.3 31.2
75.4 70.3
Net assets 75.3 77.3
Capital and reserves
Called up share capital 8 6.6 6.5
Share premium account 9 25.0 23.8
Other reserves 10 13.8 13.8
Profit and loss account 11 29.9 33.2
Shareholders’ funds 75.3 77.3
The Financial Statements were approved by the Board of Directors on 5 March 2007 and signed on its behalf by:
C. McLatchie, Chairman A. Thorburn, Finance Director 
UK GAAP PARENT COMPANY BALANCE SHEET
at 31 December 2006
68 Financial Statements
BPI-001 Accounts.qxp  20/4/07  09:27  Page 68 1. SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The Company’s financial statements are prepared on the historical cost basis, except for derivative financial instruments which are stated at their fair value, and in
accordance with applicable UK accounting standards. The following accounting policies have been applied consistently in dealing with items which are considered
material in relation to the Company’s financial statements.
Changes in accounting policies
The Company has adopted the amendments to FRS 17 “Retirement Benefits” which broadly brings UK GAAP into line with IAS 19. This has had no material effect 
on the financial statements.
Profit and loss account
Under Section 230 (4) of the Companies Act 1985, the Company is exempt from the requirement to present its own profit and loss account.
Related party transactions
As the parent company of the British Polythene Industries Group (the financial statements for which can be found on pages 70 to 75), the Company has taken
advantage of the exemption contained in FRS 8 and has therefore not disclosed transactions or balances with entities which form part of the Group.
Foreign currencies
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date,
monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary assets
and liabilities carried at historical cost that are denominated in foreign currencies are translated at the rates prevailing at the date when the historical cost was
determined. Gains and losses arising on retranslation are included in the profit and loss account for the year.
Taxation
The Company’s tax charge is based on profit for the year and tax rates in force during the year. Estimation of the tax charge requires an assessment to be made 
of the potential tax treatment of certain items which will only be resolved once finally agreed with the relevant tax authorities.
Deferred taxation
Deferred tax is recognised, without discounting, in respect of all timing differences between the treatment of certain items for taxation and accounting purposes
which have arisen but not reversed by the balance sheet date, except as otherwise required by FRS 19. A net deferred tax asset is regarded as recoverable and
therefore recognised only when, on the basis of all available evidence, it can be regarded as more likely than not that there will be sufficient taxable profits from
which the future reversal of the underlying timing differences can be deducted.
Investments
Investments are stated at cost less provisions for any impairment
Derivative financial instruments
Certain derivative financial instruments are designated as hedges in line with the Company’s treasury policy. Hedges are classified as follows: 
– Fair value hedges that hedge the exposure to changes in the fair value of a recognised asset or liability.
– Cash flow hedges that hedge exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability 
or a forecasted transaction. 
For fair value hedges, any gain or loss from remeasuring the hedging instrument at fair value is recognised in the profit and loss account. Any gain or loss on the
hedged item attributable to the hedged risk is adjusted against the carrying amount of the hedged item and similarly recognised in the profit and loss account.
For cash flow hedges, the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge, as defined by FRS 26, is recognised in
equity, with any ineffective portion recognised in the profit and loss account. When hedged cash flows result in the recognition of a non-financial asset or liability, 
the associated gains or losses previously recognised in equity are included in the initial measurement of the asset or liability. For all other cash flow hedges, the gains
or losses that are recognised in equity are transferred to the profit and loss account in the same period in which the hedged cash flows affect the profit and loss account.
Any gains or losses arising from changes in fair value of derivative financial instruments not designated as hedges are recognised in the profit and loss account.
When a hedging instrument is sold, terminated or exercised, or the entity revokes designation of the hedge relationship but the hedged forecast transaction is still
expected to occur, the cumulative gain or loss at that point remains in equity and is recognised in accordance with the above policy when the transaction occurs. 
If the hedged transaction is no longer expected to take place, the cumulative unrealised gain or loss recognised in equity is recognised immediately in the profit 
and loss account.
NOTES TO THE UK GAAP PARENT COMPANY FINANCIAL STATEMENTS 
for the year ended 31 December 2006
Financial Statements 69
BPI-001 Accounts.qxp  20/4/07  09:27  Page 69 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial guarantee contracts
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within the Group, the Company considers these to
be insurance arrangements, and accounts for them as such. In this respect, the Company treats the guarantee contract as a contingent liability until such time as it
becomes probable that the Company will be required to make a payment under the guarantee.
Share-based payments
The fair value of employee share options granted is calculated at grant date and the resulting cost is charged to the profit and loss account over the vesting period 
of the options with a corresponding increase in equity. The value of the charge is adjusted to reflect expected and actual levels of options vesting. Failures to vest as
a result of market conditions are not reversed.
Treasury shares
When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is recognised as a change in equity.
Repurchased shares are classified as treasury shares and presented as a deduction from profit and loss reserves.
Provisions and contingent liabilities
In accordance with FRS 12 “Provisions, Contingent Liabilities and Contingent Assets”, provisions are recognised where there is a present obligation as a result of a past
event, it is probable that a transfer of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
If these conditions are not met, no provision is recognised. However, contingent liabilities are disclosed in the Notes to the Financial Statements, unless the possibility 
of a transfer of economic benefits is remote. Contingent gains are not recognised unless realisation of the profit is virtually certain.
Dividends payable
Dividends payable to the Company’s shareholders are recorded as a liability in the period in which the dividends are approved.
Retirement benefit obligations
The Company participates in a Group-wide scheme, the British Polythene Pension Scheme, which has a defined benefit section (providing benefits based on final
pensionable pay) and a defined contribution section. The assets of the scheme are held separately from those of the Company. The pension costs for the defined
contribution section are charged to the profit and loss account on the basis of contributions due in respect of the financial year. In relation to the defined benefit
section of the scheme, the Company is unable to identify its share of the underlying assets and liabilities on a consistent and reliable basis and therefore, as required 
by FRS 17, the Company accounts for this scheme as a defined contribution scheme. As a result, the amount charged to the profit and loss account in respect of the
defined benefit section represents the contributions payable to the scheme in respect of the year.
2. STAFF COSTS
2006 2005
Average number of employees
Administration 10 13
Employee costs £’m £’m 
Wages and salaries 1.5 1.8
Social security costs 0.2 0.1
Other pension costs 0.2 0.2
1.9 2.1
Wages and salary costs are inclusive of any redundancy costs. Disclosures regarding Directors’ remuneration, share based payments and pension entitlements are
included on pages 36 to 40.
NOTES TO THE UK GAAP PARENT COMPANY FINANCIAL STATEMENTS 
for the year ended 31 December 2006
70 Financial Statements
BPI-001 Accounts.qxp  20/4/07  09:27  Page 70 3. FIXED ASSET INVESTMENTS
Subsidiary undertakings
Equity Non-equity Investments Total
Shares at cost less provisions £’m £’m £’m £’m 
At 31 December 2005 88.0 48.6 0.1 136.7
Cost movements in year (2.9) 3.5 – 0.6
At 31 December 2006 85.1 52.1 0.1 137.3
SUBSIDIARY UNDERTAKINGS
Except as indicated below, the Company owns the whole issued share capital of all subsidiary undertakings. The principal subsidiary undertakings are as follows:
Company Country of incorporation Trade
British Polythene Limited England Polythene Manufacturer
BPI plc England Property Company
BPI Europe BV* Netherlands Holding Company
Combipac BV* Netherlands Polythene Manufacturer
Formipac France SA* France Distribution Company
Irish Polythene Industries Limited Republic of Ireland Distribution Company
Venture Hong Kong Limited (75% owned)* Hong Kong Holding Company
Xinhui Alida Polythene Limited + China Polythene Manufacturer
* Shares held through an intermediate holding company
+ 20% owned through a subsidiary undertaking
4. DEBTORS
2006 2005
£’m £’m 
Trade debtors 0.2 0.4
Amounts due by subsidiary undertakings 22.8 22.5
Other debtors 1.8 1.2
Corporation tax 2.0 1.7
26.8 25.8
5. BANK AND OTHER BORROWINGS: AMOUNTS FALLING DUE WITHIN ONE YEAR
2006 2005
£’m £’m 
Bank overdrafts (unsecured) 3.1 7.0
6. OTHER CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
2006 2005
£’m £’m 
Trade creditors 0.3 0.3
Other taxes and social security 1.4 1.4
Accruals and deferred income 1.2 1.1
Other creditors 1.5 1.9
Amounts due to subsidiary undertakings 5.9 3.2
10.3 7.9
7. BANK AND OTHER BORROWINGS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
2006 2005
£’m £’m 
Bank loans 24.1 19.1
Other loans 20.0 20.0
44.1 39.1
Financial Statements 71
BPI-001 Accounts.qxp  20/4/07  09:27  Page 71 8. CALLED UP SHARE CAPITAL
2006 2005
£’m £’m 
Authorised
Equity
80,227,336 (2005 – 80,227,336) ordinary shares of 25p each 20.1 20.1
Allotted called up and fully paid
Equity
26,461,762 (2005 – 25,894,393) ordinary shares of 25p each 6.6 6.5
Average
Date of purchase No of
purchase price shares
Movements in equity share capital
At 31 December 2005 25,894,393
Exercise of Executive Share Options Various £2.25 435,000
Exercise of SAYE options Various £2.66 132,369
At 31 December 2006 26,461,762
9. SHARE PREMIUM ACCOUNT
£’m 
At 31 December 2005 23.8
On shares issued 1.2
At 31 December 2006 25.0
10. OTHER RESERVES
Merger Reserve £’m
At 31 December 2005 and 31 December 2006 6.5
Capital Redemption Reserve
At 31 December 2005 and 31 December 2006 7.2
Capital Reserve
At 31 December 2005 and 31 December 2006 0.1
Total other reserves at 31 December 2005 and 31 December 2006 13.8
11. PROFIT AND LOSS ACCOUNT
£’m 
At 31 December 2005 33.2
Profit for the financial year 2.6
Dividends paid (5.7)
Increase in own shares held (0.5)
Movement relative to long-term incentive plan 0.3
At 31 December 2006 29.9
The profit after taxation for the year amounted to £2.6 million (2005 – £5.8 million).
NOTES TO THE UK GAAP PARENT COMPANY FINANCIAL STATEMENTS 
for the year ended 31 December 2006
72 Financial Statements
BPI-001 Accounts.qxp  20/4/07  09:27  Page 72 12. RECONCILIATION OF MOVEMENT IN SHAREHOLDERS’ FUNDS
2006 2005
£’m £’m 
Opening shareholders’ funds 77.3 76.9
Profit for the financial year 2.6 5.8
Dividends paid (5.7) (5.4)
New shares subscribed (net of expenses) 1.3 0.1
Increase in own shares held (0.5) (0.2)
Movement relative to shares vested under the restricted share plan – (0.2)
IFRS 2 charge in relation to equity settled transactions 0.3 0.3
Net movement in shareholders’ funds (2.0) 0.4
Closing shareholders’ funds 75.3 77.3
13. OWN SHARES HELD
Cost of own
shares held
£’m 
At 31 December 2005 0.8
Shares purchased 0.5
At 31 December 2006 1.3
The cost of own shares held represents shares held by the British Polythene Industries Employee Share Ownership Trust to satisfy the Company’s liabilities under the
restricted share plan and the long-term incentive plan. The market value of the shares is £1.4 million (2005 – £1.0 million).
Date of Average Date of Average
purchase/ purchase Number purchase/ purchase Number
allocation price of shares allocation price of shares
2006 2006 2006 2005 2005 2005
Movements in the numbers of shares held
At 1 January 208,581 189,461
No of shares allocated to employees Various (8,125) Various (77,760)
Shares purchased Various £4.27 100,000 Various £4.14 96,880
At 31 December 300,456 208,581
14. DIVIDENDS
2006 2005
£’m £’m 
Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 December 2005 of 15.0p per share (2004 – 14.0p) 3.9 3.6
Interim dividend for the year ended 31 December 2006 of 7.0p per share (2005 – 7.0p) 1.8 1.8
5.7 5.4
Proposed final dividend for the year ended 31 December 2006 of 15.0p (2005 – 15.0p) per share 4.0 3.9
The proposed final dividend of 15.0p (2005 – 15.0p) per share will be paid on 11 May 2007 to shareholders on the register at close of business on 16 March 2007. 
The final dividend is to be approved by the shareholders on 10 May 2007 and has not been included as a liability at 31 December 2006.
Financial Statements 73
BPI-001 Accounts.qxp  20/4/07  09:27  Page 73 15. CONTINGENT LIABILITIES
On 30 June 2006 we announced that the European Commission have decided to close the files on the original investigation into anti-competitive activities 
in Industrial Film.
The Company has guaranteed the bank overdrafts of certain subsidiaries amounting at 31 December 2006 to £5.3 million (2005 – £4.0 million) including 
interest from time to time thereon. The Company also has an obligation under the Group VAT registration amounting at 31 December 2006 to £3.2 million 
(2005 – £3.1 million).
16. SHARE BASED PAYMENTS
Equity-settled share option plan
The Group plan provides for a grant price equal to the quoted market price of the Group shares on the date of grant. All options under this plan were granted on 
22 March 2003 at £2.25 and there are no plans to grant further options under this plan. The vesting period is three years with the possibility to retest after four or five
years. All options granted under this scheme were exercised during the year following the achievement of the targets in 2005.These options were subject to growth
over a three year period in the basic EPS before exceptional items compared with the rate of inflation. No part of an option would be exercisable unless growth in
EPS exceeded that of the Retail Price Index (“RPI”) by at least 9%. At the minimum level 50% of an option would vest, with full vesting at 15% above RPI. If the minimum
level had not been achieved in the three year period, the performance period would have been extended to four and then five years, with an addition 
of 3% to the minimum and 5% to full vesting targets for each additional year.
Long-term incentive plan
In 2005 the Group introduced a new Long-Term Incentive Plan for senior executives. Shares are conditionally awarded under this plan and vest in employees based
on performance criteria set out below.
The EPS part of an award will vest if the Company’s EPS growth is at least RPI plus 10% per annum over the performance period; no shares will vest if EPS growth 
is not at least RPI plus 3% per annum. For performance between these two points, vesting will occur on a sliding scale.
For the portion of the award based on Total Shareholder Return (“TSR”), no vesting will occur for ranking below median. At the median 10% of the award will vest 
with the full 50% vesting for a ranking at or above the upper quartile. Vesting occurs on a sliding scale between these two points.
Savings related share option scheme
The employee savings related share option scheme is open to almost all employees. The recognition and measurement principles in FRS 20 have not been applied,
as permitted, to grants of options under the scheme prior to 7 November 2002. These grants were at a price equal to the market price on the date of grant. Employees
save over a three or five year period at the end of which period shares can be purchased during the following six month period. During the period the Group issued
132,369 shares (2005 – 30,417 shares) shares at a weighted average price of £2.66 (2005 – £2.73) under this scheme. A new grant of options was made on the 
19 October 2006 over similar periods at a price 10% below the market price on the date of grant.
2006 2006 2005 2005
LTIP Options LTIP Options
Outstanding at beginning of year 335,000 435,000 – 585,000
Granted during the year 173,250 – 337,500 –
Exercised during the year (435,000)
Forfeited during the year (8,750) – (2,500) (150,000)
Outstanding at the end of the year 499,500 – 335,000 435,000
Exercisable at the end of the year –– ––
At 31 December 2006 the individual options, not yet exercised, of Directors and other employees under the savings related share option scheme are as follows:
Date from 
Date of which Expiry Option Other 
grant exercisable date price Directors employees Total
Savings Related Scheme 10/10/2001 01/12/2006 31/05/2007 266.16p 0 44,518 44,518
Savings Related Scheme 19/10/2006 01/12/2009 31/05/2010 369.45p 2,557 150,937 153,494
Savings Related Scheme 19/10/2006 01/12/2011 31/05/2012 369.45p 8,864 227,778 236,642
11,421 423,233 434,654
NOTES TO THE UK GAAP PARENT COMPANY FINANCIAL STATEMENTS 
for the year ended 31 December 2006
74 Financial Statements
BPI-001 Accounts.qxp  20/4/07  09:27  Page 74 16. SHARE BASED PAYMENTS (CONTINUED)
A charge for all of these schemes has been based upon the Binomial model and the inputs into the model are as follows:
SAYE LTIP LTIP Options
Year of Grant 2006 2006 2005 2003
Share price £4.46 £4.61 £3.59 £2.25
Weighted average exercise price £4.014 Nil Nil £2.25
Expected volatility 24.79% 18.94% 20.23% 33.56%
Expected life 3/5 years 3 years 3 years 5 years
Risk-free rate 4.88% 4.15% 4.54% 3.72%
Expected dividends 4.93% 4.55% 5.85% 9.33%
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the three years immediately preceding grant. The expected life
used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural
considerations.
The Company recognised total expenses of £0.3 million relating to equity-settled share-based payment transactions in 2006 (2005 – £0.3 million).
17. PENSIONS
Defined Contribution Schemes
The assets of the defined contribution section and other insured schemes (including those being maintained on a temporary basis) are held separately from those 
of the Group, being invested with a number of insurance companies. 
The pension charge includes contributions payable to the various insurance companies.
Defined Benefit Scheme
The Company is a member of a larger Group-wide pension scheme providing benefits based on pensionable pay. As the Company is unable to identify its share 
of the scheme assets and liabilities on a reasonable and consistent basis, as permitted by FRS 17 “Retirement benefits”, the scheme is accounted for as if it were a
defined contribution scheme. The Company made contributions of £0.2 million (2005 – £0.2 million) in the year. There were no outstanding or prepaid Company
contributions at either the beginning or the end of the financial year. Details of the FRS 17 position of the scheme are set out below. The assets of the defined benefit
section are invested in a self-administered trust fund and hence are also separated from the Group’s business assets.
FRS 17 Disclosures
The Company has adopted the amendments to FRS 17 in these accounts and considers that the IAS 19 Group disclosures found on pages 65 to 68 satisfy all FRS 17
disclosure requirements.
Financial Statements 75
BPI-001 Accounts.qxp  20/4/07  09:27  Page 75 FINANCIAL CALENDAR 2007 
10 May 2007
Annual General Meeting
14 May 2007
Payment of 2006 Final Dividend
September 2007
Announcement of 2007 Interim Results
November 2007
Payment of 2007 Interim Dividend
FINANCIAL CALENDAR 2008
March 2008
Announcement of 2007 Annual Results
April 2008
Issue of 2007 Annual Report and Accounts
May 2008
Annual General Meeting
Payment of 2007 Final Dividend
REGISTRARS
Enquiries concerning the holding of ordinary 
shares in the Company should be addressed 
to the Registrars who should also be notified 
of any changes in a holder’s address.
The Registrars are: 
Computershare Investor Services PLC, PO Box 82, 
The Pavilions, Bridgwater Road, Bristol, BS99 7NH.
HEAD OFFICE
British Polythene Industries PLC
96 Port Glasgow Road Greenock PA15 2UL 
Telephone: 01475 501 000 Fax: 01475 743 143
WEBSITE
The Company has a website www.bpipoly.com
which provides details of all major stock exchange
announcements, the current share price and
information on businesses and products.
SHARE PRICE INFORMATION
The latest information on the Company’s share
price is published in most newspapers, is available
on Channel 4 Teletext, the Financial Times cityline 
services, telephone number 0906 843 0000 
(Code 3966) and a number of websites including
the London Stock Exchange.
www.londonstockexchange.com
FTSE4GOOD INDEX
The Company continues to be part of the Index.
The Index is designed to measure the performance
of companies that meet globally recognised
corporate responsibility standards, and to facilitate
investment in those companies.
YOUR SHAREHOLDING
You may check your shareholding at any time 
by visiting the Registrars website
www.uk.computershare.com/investors
REGISTERED OFFICE
One London Wall, London, EC2Y 5AB
REGISTRATION NUMBER
108191
INFORMATION FOR SHAREHOLDERS
76 Information for Shareholders
BPI-001 Accounts.qxp  20/4/07  09:27  Page 76 RE-USE
Consumers often re-use plastic bags and
sacks. In this case, sacks which contained
growing media, bark and decorative
stones are used to transport garden
waste to the local composting centre.
navyblue design group
BPI-001 REPORT COVER.qxp  20/4/07  09:34  Page 3 RECYCLE
Transit packaging is an important source 
of polythene material for recycling. Pallet
covers which are used to safely transport
bottles from the manufacturer to the filling
plant are collected and baled before being
transported to one of our recycling facilities. 
www.bpipoly.com
British Polythene Industries PLC
96 Port Glasgow Road Greenock PA15 2UL 
Telephone: 01475 501 000 Fax: 01475 743 143
BPI-001 REPORT COVER.qxp  20/4/07  09:34  Page 4