Filtrona plc  Annual Report and Accounts 2006
Filtrona plc
Avebury House
201–249 Avebury Boulevard
Milton Keynes
Buckinghamshire
MK9 1AU
United Kingdom
T: +44 (0)1908 359100
F: +44 (0)1908 359120
E: enquiries@filtrona.com
www.filtrona.com
Filtrona plc
Annual Report and Accounts 2006
Filtrona is an international, market leading, 
speciality plastic and fibre products supplier.
By concentrating on niche international markets 
Filtrona has been able to establish and develop 
strong positions in its chosen product categories. 
It is a well invested global business, headquartered 
in the UK, with 37 manufacturing facilities,  
32 distribution units and four research facilities  
spread across 23 countries in the Americas, 
Europe and Asia. Filtrona employs some 5,600 
people worldwide.
Filtrona plc
01 Highlights
02 Principal International Developments
 Business Review
04 Chairman’s Statement
06 Chief Executive’s Review
20 Financial Review
23 Analysis of Principal Risks
 Governance
26 Board of Directors
29 Directors’ Report
33 Report of the Remuneration Committee 
41 Corporate Governance Report
46 Corporate Social Responsibility Report
 Financial Statements
49 Consolidated income statement
50 Consolidated balance sheet
51 Consolidated statement of cash flows
52 Consolidated statement of recognised  
income and expense
53 Accounting policies
58 Notes
80 Independent Auditor’s Report to the members 
of Filtrona plc
81 Filtrona plc balance sheet
82 Accounting policies
83 Notes 
86 Independent Auditor’s Report to the members 
of Filtrona plc
 Shareholder Information
87 Advisors’ details and investor information
88 Financial calendar 2007
Cautionary Statement 
Except for the historical information contained herein, the matters discussed in this Annual Report and 
Accounts include forward looking statements that involve risk and uncertainties that could cause actual 
results to differ materially from those predicted by such forward looking statements. These risks and 
uncertainties include international, national and local conditions as well as competition. The Company 
undertakes no obligation to publicly update any statement, whether as a result of new information, future 
events or otherwise.
Fibertec (cover)
Filtrona Fibertec provides important components  
for point of care medical test kits. Each component 
within the diabetes test device shown incorporates 
1,400 metres of fibre. Filtrona plc  Annual Report and Accounts 2006
Filtrona plc
Avebury House
201–249 Avebury Boulevard
Milton Keynes
Buckinghamshire
MK9 1AU
United Kingdom
T: +44 (0)1908 359100
F: +44 (0)1908 359120
E: enquiries@filtrona.com
www.filtrona.com
Filtrona plc
Annual Report and Accounts 2006
Filtrona is an international, market leading, 
speciality plastic and fibre products supplier.
By concentrating on niche international markets 
Filtrona has been able to establish and develop 
strong positions in its chosen product categories. 
It is a well invested global business, headquartered 
in the UK, with 37 manufacturing facilities,  
32 distribution units and four research facilities  
spread across 23 countries in the Americas, 
Europe and Asia. Filtrona employs some 5,600 
people worldwide.
Filtrona plc
01 Highlights
02 Principal International Developments
 Business Review
04 Chairman’s Statement
06 Chief Executive’s Review
20 Financial Review
23 Analysis of Principal Risks
 Governance
26 Board of Directors
29 Directors’ Report
33 Report of the Remuneration Committee 
41 Corporate Governance Report
46 Corporate Social Responsibility Report
 Financial Statements
49 Consolidated income statement
50 Consolidated balance sheet
51 Consolidated statement of cash flows
52 Consolidated statement of recognised  
income and expense
53 Accounting policies
58 Notes
80 Independent Auditor’s Report to the members 
of Filtrona plc
81 Filtrona plc balance sheet
82 Accounting policies
83 Notes 
86 Independent Auditor’s Report to the members 
of Filtrona plc
 Shareholder Information
87 Advisors’ details and investor information
88 Financial calendar 2007
Cautionary Statement 
Except for the historical information contained herein, the matters discussed in this Annual Report and 
Accounts include forward looking statements that involve risk and uncertainties that could cause actual 
results to differ materially from those predicted by such forward looking statements. These risks and 
uncertainties include international, national and local conditions as well as competition. The Company 
undertakes no obligation to publicly update any statement, whether as a result of new information, future 
events or otherwise.
Fibertec (cover)
Filtrona Fibertec provides important components  
for point of care medical test kits. Each component 
within the diabetes test device shown incorporates 
1,400 metres of fibre. Board photography by Mike Austen
Product photography by Lee Funnell
Filtrona plc at a glance
Plastic Technologies
Plastic Technologies produces, sources and distributes 
protection and finishing products, self-adhesive tear tape 
and certain security products as well as proprietary and 
customised plastic extrusions and packaging items for 
consumer products.
Protection and Finishing Products
Facilities in the UK, Continental Europe, US, 
Canada, Mexico, and Brazil provide rapid 
supply of primarily plastic products for general 
protection, masking, electrical, fastening, 
security and finishing applications.
Coated and Security Products
Worldwide operations provide self-adhesive 
tear tape and coated film products for use in 
brand promotion, document authentication, 
personal identification and other security 
applications, including track and trace 
technology.
Plastic Profile and Sheet
Locations in the US, Mexico and  
the Netherlands supply thermoplastic profile, 
sheet and speciality tubes for a selected 
range of applications including lighting, 
fencing, signs and displays, refrigeration, 
medical and traffic control.
Consumer Packaging
Globalpack, based in Brazil, is a leading 
speciality manufacturer of complete  
plastic packaging sets for the cosmetic  
and personal care, pharmaceutical,  
food and chemical industries.
Cigarette Filters
Twelve locations worldwide produce a  
wide range of filters from monoacetate to 
multi-segment special filters with sophisticated 
adsorbent materials. 
Bonded Fibre Components
With locations in the US, Germany and
China, Fibertec is the leading manufacturer
of bonded fibre components used in a
wide range of consumer disposable
products including writing instruments,
inkjet printer reservoirs, medical devices
and air fresheners.
Plastic Technologies overview
    2006 2005 %
Sales  £289.5m £273.3m  +5.9
Operating profit*  £41.4m £37.6m  +10.1
Margin  14.3% 13.8% 
* before intangible amortisation
Fibre Technologies overview
    2006 2005 %
Sales  £254.7m £240.4m +5.9
Operating profit*  £28.1m £26.9m +4.5
Margin  11.0% 11.2%
Fibre Technologies
Fibre Technologies focuses on the production and 
supply of special filters for cigarettes and bonded fibre 
products such as reservoirs and wicks for writing 
instruments and printers, household products and 
medical devices.
* before intangible amortisation
www.filtrona.com At a glance Board photography by Mike Austen
Product photography by Lee Funnell
Filtrona plc at a glance
Plastic Technologies
Plastic Technologies produces, sources and distributes 
protection and finishing products, self-adhesive tear tape 
and certain security products as well as proprietary and 
customised plastic extrusions and packaging items for 
consumer products.
Protection and Finishing Products
Facilities in the UK, Continental Europe, US, 
Canada, Mexico, and Brazil provide rapid 
supply of primarily plastic products for general 
protection, masking, electrical, fastening, 
security and finishing applications.
Coated and Security Products
Worldwide operations provide self-adhesive 
tear tape and coated film products for use in 
brand promotion, document authentication, 
personal identification and other security 
applications, including track and trace 
technology.
Plastic Profile and Sheet
Locations in the US, Mexico and  
the Netherlands supply thermoplastic profile, 
sheet and speciality tubes for a selected 
range of applications including lighting, 
fencing, signs and displays, refrigeration, 
medical and traffic control.
Consumer Packaging
Globalpack, based in Brazil, is a leading 
speciality manufacturer of complete  
plastic packaging sets for the cosmetic  
and personal care, pharmaceutical,  
food and chemical industries.
Cigarette Filters
Twelve locations worldwide produce a  
wide range of filters from monoacetate to 
multi-segment special filters with sophisticated 
adsorbent materials. 
Bonded Fibre Components
With locations in the US, Germany and
China, Fibertec is the leading manufacturer
of bonded fibre components used in a
wide range of consumer disposable
products including writing instruments,
inkjet printer reservoirs, medical devices
and air fresheners.
Plastic Technologies overview
    2006 2005 %
Sales  £289.5m £273.3m  +5.9
Operating profit*  £41.4m £37.6m  +10.1
Margin  14.3% 13.8% 
* before intangible amortisation
Fibre Technologies overview
    2006 2005 %
Sales  £254.7m £240.4m +5.9
Operating profit*  £28.1m £26.9m +4.5
Margin  11.0% 11.2%
Fibre Technologies
Fibre Technologies focuses on the production and 
supply of special filters for cigarettes and bonded fibre 
products such as reservoirs and wicks for writing 
instruments and printers, household products and 
medical devices.
* before intangible amortisation
www.filtrona.com At a glance +5.9% +6.6% +9.2%
+6.7% +7.8%
£544.2m
2004 477.5
2005 513.7
2006 544.2
120.0
120.2
98.8
£61.6m
2004 53.1
2005 57.8
2006 61.6
16.0p
2004
2005
2006
6.9p
2004*
2005
2006
£98.8m
2004
2005
2006
£54.6m
2004 45.7
2005 50.0
2006 54.6
14.0
15.0
16.0
5.9
6.4
6.9
Revenue Operating proﬁt
Δ
Proﬁt before tax
Net debt Adjusted earnings per share
†
Dividend per share
#
+5.9% +6.6% +9.2%
+6.7% +7.8%
£544.2m
2004 477.5
2005 513.7
2006 544.2
120.0
120.2
98.8
£61.6m
2004 53.1
2005 57.8
2006 61.6
16.0p
2004
2005
2006
6.9p
2004*
2005
2006
£98.8m
2004
2005
2006
£54.6m
2004 45.7
2005 50.0
2006 54.6
14.0
15.0
16.0
5.9
6.4
6.9
Revenue Operating proﬁt
Δ
Proﬁt before tax
Net debt Adjusted earnings per share
†
Dividend per share
#
www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 01
Highlights
for the year ended 31 December 2006
Above trend organic profit growth
Protection and Finishing Products becomes largest profit 
contributing line of business
First FractureCode agreement signed
Record performance within Plastic Profile and Sheet
Cigarette Filters’ Mexican facility makes profit in last quarter
Fibertec factory expansion in China begins
•
•
•
•
•
•
r before intangible amortisation and demerger expense
† 
before intangible amortisation and demerger expense less tax relief thereon
# 
interim dividend plus proposed final dividend
*
 
notional www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 02
Plastic Technologies
Fibre Technologies
Multiple
Principal International Developments
Mexico
The Monterrey Plastic Profile and Sheet 
facility has been expanded significantly 
to support business growth
Brazil
The third deodorant roll-on ball line came 
on stream at the end of the first quarter
United Kingdom
A new label placing line was commissioned 
to support business with the new 
generation UK passport
Filtrona operates in a dynamic international market 
environment. The Company continues to invest  
to expand capacity and capability, to improve 
operational performance and customer service  
and to exploit new business opportunities. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 03
Plastic Technologies
Fibre Technologies
Multiple
China
The expansion of the successful Ningbo 
operation is scheduled for completion in  
the third quarter of 2007
 37 Manufacturing facilities
 32 Distribution units
 4 Research facilities
5,600 Employees
Germany
The expansion of the Moss distribution 
hub will deliver significant service benefits 
to the Continental European operations
Indonesia
The transfer of the Cigarette Filters 
business to a new and larger facility in 
Surabaya was completed successfully www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 04
Business Review
Chairman’s Statement
Jeff Harris
Results summary
This is Filtrona’s first full financial year as an 
independent listed company following the 
separation from Bunzl plc in June 2005. 
Our management has shown the benefits 
of that independence by delivering revenue 
growth of 5.9%, profit before tax growth of 
9.2%, and increasing diluted earnings per 
share by 8.3%. Underlying operating profit 
grew by 9.0%, after taking account of 
foreign currency translation and a full year 
of central service cost, which is well ahead 
of our historical trend of organic growth.
The Company is established as an 
international group with strong market 
positions and manufacturing facilities in 
most major markets in the world.
Both business segments made real 
progress in 2006, with Plastic Technologies 
showing particularly strong profit and 
margin improvement. Fibre Technologies 
recovered from the tough conditions in the 
first half of the year and delivered both 
revenue and profit growth for the full 
financial year. 
The Company achieved an 81% 
improvement in net cash inflow before 
financing activities, increasing from £15.8m 
in 2005 to £28.6m.  www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 05
Filtrona delivered a strong set of results in 2006.  
We expect to maintain good underlying growth in  
2007 and, with improved cash generation and a strong 
balance sheet, we are seeking value enhancing acquisitions
 
This was largely achieved by operational 
management focusing on stronger working 
capital control. During the year interest cover 
increased to 10.1 times (2005: 9.6 times) 
and, at the year end, the ratio of net debt to 
earnings before interest, tax, depreciation 
and amortisation had improved from 1.5 in 
2005 to 1.2 in 2006.
Dividend
The Board is recommending a final 
dividend of 4.6p per share which, if 
approved at the Annual General Meeting 
(‘AGM’), will make a total of 6.9p (2005: 
6.4p) per share for the full year. This 
represents a 7.8% increase on last year. 
The final dividend will be paid on 4 May 
2007 to shareholders on the register at  
10 April 2007 .
Board 
The Board, which was established at the 
time of flotation, has successfully introduced 
the high standards of governance which are 
appropriate to an independent listed 
company as well as reviewing the business 
strategy of the Company. It met eight times 
during the year, with two Board meetings 
being held at operating sites to enable the 
Non-executive Directors to meet key local 
management and further extend their 
knowledge of the Company’s manufacturing 
facilities within the UK and Europe. 
Warren Knowlton became a Non-executive 
Director of the Company on 1 June 2006. At 
the end of 2006, Warren assumed a full-time 
chief executive role in the US and, as a 
result, he is not putting himself forward for 
re-election at the AGM and will leave the 
Board on 30 April 2007 . We are grateful to 
Warren for his valuable contribution. The 
recruitment of a replacement for Warren is 
already under way.
Employees
After the challenges presented by the 
demerger, Filtrona’s employees renewed their 
focus on generating sustained growth of 
revenue and profit throughout 2006. The 
performance of the Company demonstrates 
the commitment and skill of Filtrona 
employees across the many regions in which 
the businesses operate. On behalf of the 
Board and the shareholders, I would like to 
thank them all for their continuing contribution 
to the strong development of Filtrona. 
Outlook
Looking forward, Filtrona expects 2007 to be 
a year of further good underlying progress, 
although the headline results will be affected 
by an anticipated £5m restructuring charge. 
As previously announced, this charge  
relates to the restructuring of Cigarette Filters’ 
manufacturing facilities to match the expected 
reduction in demand for conventional carbon 
dual filters. 
In Plastic Technologies, the combination of 
strong market positions and the expected 
favourable trading conditions give the 
Company confidence in continued positive 
progress in 2007. 
Within Fibre Technologies, further progress is 
expected in revenue and operating profit from 
the Bonded Fibre Components business and 
the Company remains confident in the future 
prospects for Cigarette Filters.
The Company will continue to invest in  
the organic growth of the business and it  
is anticipated that capital spend in 2007  
will again be ahead of depreciation.  
Capital investments will reduce unit costs  
of production and improve both quality  
and service performance. Revenue 
investments will drive geographic 
expansion, product innovation and 
intellectual property development. In 
addition, the Company remains active in 
the pursuit of value enhancing acquisitions 
in selected niche markets. 
With a clear strategy, a committed team 
and a strong balance sheet, the Board 
remains confident the Company will 
continue to achieve good underlying 
growth and deliver attractive returns.
Jeff Harris
Chairman
1 March 2007 Business Review
Chief Executive’s Review
Mark Harper
www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 06
Filtrona Values
Our style
 We will be open, honest and enthusiastic, 
celebrating our successes and learning 
from our experiences
 We will be passionate in our pursuit of 
excellence and dedicate ourselves to the 
very best of quality in everything we do
 We will work as a team, valuing everyone’s 
contribution and minimising bureaucracy
 We will treat each other in a consistent 
and fair manner
Our responsibilities
 We will share our company strategy, and 
ensure we understand the part we play in it
 We will all have clear goals, the necessary 
resources and freedoms to achieve them, 
and honest assessment of our performance
 We will always conduct ourselves with 
integrity and respect – for our fellows and 
for our environment
 We will aim to advance our knowledge,  
skills and professionalism in all we do
 We will do our best and accept 
accountability for our actions
Our goals
 We will strive to delight our customers and 
hold the respect of our suppliers
 We will work together to grow our business 
for the benefit of our stakeholders
•
•
•
•
•
•
•
•
•
•
• North America 40.4%
Europe 35.2%
Rest of World 24.4%
Tobacco
Toiletries
Writing Instruments
Transport
Oil & Gas
Point of Purchase
Lighting
Construction
Fence
Other/Miscellaneous
£191.7m
£132.9m
£219.6m
www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 07 07
Overview
Filtrona is an international, market leading, 
speciality plastic and fibre products supplier 
with activities segmented into Plastic 
Technologies and Fibre Technologies.
Plastic Technologies produces, sources 
and distributes protection and finishing 
products, self-adhesive tear tape and 
security products as well as proprietary  
and customised plastic extrusions and 
packaging items for consumer products.
Fibre Technologies focuses on the 
production and supply of special filters  
for cigarettes and bonded fibre products 
such as reservoirs and wicks for writing 
instruments and printers, household 
products and medical devices.
Filtrona derives strength from serving  
a diverse group of customers across a 
selected range of niche markets. Filtrona  
is a supplier throughout the world to  
many international, blue chip, market 
leading customers.
In 2006, the geographic destination of the 
Company’s revenue was as shown above.  
The Rest of World segment includes many 
of the lower cost manufacturing regions 
and has grown from 22.5% of revenue in 
2004 to 24.4% in 2006.
As the Company moves into new regions 
for manufacture and supply it seeks to 
maximise the opportunities across all of its 
lines of business. It is expected that the 
expansion of the Ningbo, China factory, 
which was opened in 2004 by the Bonded 
Fibre Components business, will facilitate 
the introduction of both Protection and 
Finishing Products and Plastic Profile and 
Sheet activities into the Chinese market 
during 2007.
Performance
Last year Filtrona reported that it had made 
a promising start as an independent listed 
company. In its first full financial year since 
the June 2005 demerger, the Company 
continued to perform well with revenue  
up 5.9% to £544.2m (2005: £513.7m)  
and operating profit before intangible 
amortisation and demerger expense up 
6.6% to £61.6m (2005: £57 .8m). Underlying 
operating profit growth was 9.0% after 
taking account of the impact of foreign 
currency translation and a full year of central 
service cost. The net cash inflow from 
operating activities was strong at £61.1m 
(2005: £56.9m) up 7 .4%. The return on 
average operating capital excluding 
intangibles improved from 23.7% to 23.8% 
in 2006 and adjusted earnings per share 
grew by 6.7% from 15.0p to 16.0p.
Strategy
Filtrona’s strategy is to continue to grow 
profitably through investing organically and 
by acquisition in selected niche international 
markets within Plastic Technologies and 
Fibre Technologies. The Company 
endeavours to strengthen its competitive 
position through product innovation, 
sourcing and distribution expansion, supply 
chain improvement and cost reduction. In 
addition, investments in people, systems 
and infrastructure, combined with the 
acquisition of selected value enhancing 
businesses, will also drive the future 
performance of Filtrona. 
Revenue by destination www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 08
Plastic Technologies
Plastic Technologies had another very 
successful year with revenue up 5.9% to 
£289.5m (2005: £273.3m) and operating 
profit before intangible amortisation  
up 10.1% to £41.4m (2005: £37.6m).  
The operating margin improved again  
to 14.3% (2005: 13.8%) reflecting the  
stronger performance of the higher margin 
businesses. During 2006, polymer input 
costs rose progressively throughout the 
year in Europe but showed some easing 
during the final quarter in the Americas 
after three consecutive quarters of 
increases. These increases were fully 
recovered, through selective pricing action, 
thereby underlining the strength of 
Filtrona’s niche market positions. Revenue 
per employee increased by 2.4% to 
£94,763 (2005: £92,550) and operating 
profit before intangible amortisation per 
employee increased by 6.4% to £13,552 
(2005: £12,733).
Business Review
Chief Executive’s Review
Protection and Finishing Products  
has grown to become the largest profit  
contributing line of business
Protection and Finishing Products again 
performed particularly well. It has now 
grown to become Filtrona’s largest profit 
contributing line of business and is 
expected to continue in this position. The 
key strategic drivers behind its progress 
remain geographic development, product 
range expansion and investment in 
marketing programmes. 
Moss, the pan-European plastic parts 
supplier, continued to gain market share  
in Continental Europe and maintained its 
market leading position in the UK where  
the ongoing decline of manufacturing 
industry is generating tough trading 
conditions. The mix of proprietary and 
custom lines strengthened further in favour 
of proprietary products. The expansion of 
the Moss North European distribution hub  
in Germany was completed in April 2006 
and this will yield important service benefits 
to the Continental European operations.  
The Company intends to continue the 
development of the distribution network and 
the opening of the next unit in Hungary is 
planned for the first half of 2007 . 
In China, the headcount within the sourcing 
organisation in Ningbo was further increased 
and reliable, high quality sources for both 
finished products and tooling have now 
been established. Production output 
improved as a result of investment in larger 
machines and tooling, and a new tool 
handling and storage system was completed 
in the second half of the year at the 
Oxfordshire facility. The disposal of a small 
non-core plastic promotional products 
business was completed in March 2006.
Skiffy, the European specialist small nylon 
parts producer, achieved strong sales 
growth and continued to perform well  
ahead of the forecasts set at the time of its 
acquisition in 2004. All locations benefited 
from further investment in marketing 
programmes which, combined with 
improved productivity, increased margins. 
Internet ordering via the website,  
www.skiffy.com, is an important component 
of the business model and usage again 
increased to account for 22.0% of Skiffy’s 
2006 revenues. The new Skiffy distribution 
facility in Poland is now fully operational. Filtrona plc  Annual Report and Accounts 2006 09 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 09
Plastic Technologies
Protection and Finishing Products
ACC caps
These caps are used to protect the charge ports on 
residential and automotive air conditioning systems. 
Alliance has the capacity to produce in excess of 40 
million caps each year www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 10
Business Review
Chief Executive’s Review
In the Americas, Alliance, the US-based 
plastic parts supplier, continued to 
progress as planned with good growth 
despite the weakness in the automotive 
sector. During 2006 substantial internal 
resources were dedicated to the 
implementation programme for a new 
computer system which will streamline 
operations and improve customer service. 
The new system went live successfully over 
the year end period without business 
disruption and benefits from the 
improvements to overall efficiency are 
already being seen. 
The new manufacturing operation in Saõ 
Paulo started up on schedule and the 
improved competitiveness from 
manufacturing locally is already having a 
positive impact on revenue growth rates in 
Brazil. The configuration of the Erie, 
Pennsylvania central warehouse was 
modified to improve stocking density by 
35%. Unit production costs continued to fall 
at the Erie facility as a result of further 
investment in new machinery and high 
cavitation tooling.
Preparations were made for a new Alliance 
Express location in Chicago, US which is 
now open. 
Performance at MSI, the oil country tubular 
goods thread protector business, was again 
strong, resulting from favourable trading 
conditions, market share gains and 
investment-driven productivity improvements. 
At the end of the year, trial orders were placed 
by an important new international customer 
and the benefit from this new account should 
feed through in 2007 . Additional investments 
in new production machinery and tooling 
were made at Houston, Texas and Vera Cruz, 
Mexico and the purchase of land adjacent to 
the Houston facility was completed to secure 
space for the future growth of that operation. 
Protection and Finishing Products has a 
clear strategy and good momentum behind 
it. Looking ahead to 2007, it is expected 
again to perform well.
Coated and Security Products continued 
to pursue its strategy of developing new 
security technologies and applications, 
whilst sustaining its world leadership 
position in the self-adhesive tear tape 
market. A modest revenue increase was 
achieved, with the good growth in security 
products and FractureCode partly offset  
by reductions in tear tape. 
The tear tape business suffered from 
continued weakness in demand for 
promotional tapes as some important 
customers in the tobacco sector reduced 
promotional activity. Sales into other fast-
moving consumer goods (‘FMCG’) sectors 
were strong. The facility in Richmond, US 
was upgraded to enable the printing of 
security products and, during the second 
half of the year, new slitting lines were 
installed in the UK and US to enhance both 
productivity and quality. In January 2007,  
a labour cost reduction programme was 
announced within the tear tape business.
Coated and Security Products sustained  
its world leadership position in the  
self-adhesive tear tape market FractureCode
With more than 2.7x10
50
 unique combinations 
possible, every tax stamp in the world could  
be individually coded for the next 100 years
www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 11
Plastic Technologies
Coated and Security Products www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 13 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 12
Good market demand and reduced costs 
delivered a record year for Plastic Profile  
and Sheet
Business Review
Chief Executive’s Review
Supplies of the laminate for the new 
generation UK passport were strong 
throughout 2006 and a new label placing 
line for this project was commissioned  
in the first half of the year. In May the 
acquisition of the CORGI identity card 
printing operation was announced  
and production was successfully relocated 
to the Payne facility in North Wales where a 
major upgrade programme was completed. 
Machinery for the production of security 
labels was ordered and this, combined with 
the development of proprietary security 
technologies for use across the business,  
is anticipated to stimulate sales within 
Payne during 2007. 
In August 2006, the first FractureCode 
licence for its patented track and trace 
technology was agreed with a major FMCG 
company and the roll out is progressing  
well. The losses incurred in the first half of 
the year were substantially reversed in the 
second half and the business incurred a 
small deficit for the year. Since the launch  
in May at the Intergraf Symposium, a major 
international industry event, the FractureCode 
organisation has been strengthened 
progressively to facilitate growth as  
new prospects are developed. 
A new Managing Director has been 
recruited with relevant experience in the  
IT industry.
The increasing investment in the development 
of new security technologies, and the focus 
on reducing cost are anticipated to result in  
a satisfactory performance for the Coated 
and Security Products business in 2007 
despite the ongoing weak demand for 
promotional tapes. 
Plastic Profile and Sheet achieved  
strong growth in the year, resulting from  
the combination of good market demand 
and significant restructuring to reduce cost 
and enhance organisational effectiveness. 
Sales in the North American facilities were 
particularly encouraging and performance 
was assisted by the closure of the small 
Phoenix, Arizona facility at the start of 2006 
and the transfer of production to the facilities 
at Chicago and Tacoma in the US and 
Monterrey in Mexico. 
Further factory rationalisation has been 
announced involving the consolidation in  
the US of the two Massachusetts facilities 
into one at Athol, where a significant 
redevelopment is being undertaken, 
including the construction of a new clean 
room for medical products. The Monterrey 
facility has been expanded to support 
business growth and the addition of a new 
clean room for medical products is planned 
for 2007 .
During 2006 the North American 
organisation has been restructured with  
a reduction from three to two operating 
regions and the establishment of a central 
marketing and sales function for the key 
product groups. Sector specialist sales 
groups have been formed to sharpen  
focus and to facilitate improved market 
penetration. Sales into the key aerospace 
and point of purchase markets in North 
America have been very strong with point  
of purchase revenue in 2006 being more 
than double the level of circa US$12m 
achieved in 2004. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 13 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 12
Plastic Technologies
Plastic Profile and Sheet
Cable trunking 
This hinged cable trunking profile is typical of the 
value adding products supplied to customers by 
Filtrona’s Profile and Sheet businesses which use  
in excess of 40 million kg of polymer each year Business Review
Chief Executive’s Review
Further investment in machinery took place 
across the network of facilities which, in 
conjunction with continuous improvement 
activities, assisted in reducing conversion 
costs. Good revenue growth continued at  
the Enitor business in the Netherlands and  
a major factory expansion was completed  
in the summer.
With the benefits accruing from the 
strengthened management team, the  
new structure and the streamlined plant 
configuration, it is anticipated that the US 
Plastic Profile and Sheet business will have 
another good year in 2007, subject to 
underlying activity in the US economy 
remaining healthy. The European Plastic 
Profile and Sheet business should continue 
to experience good growth.
The Globalpack Consumer Packaging 
business in Brazil experienced very tough 
trading conditions in the first half as 
performance was held back by market 
overcapacity, particularly in tubes, and  
rising raw material prices. The improved 
performance in the second half, which was 
consistently ahead of the comparable period 
in 2005, was driven by the combination  
of greater demand, recovery of rising  
raw material costs through pricing and 
improvements in manufacturing efficiencies. 
The third deodorant roll-on ball line came 
on stream successfully at the end of the 
first quarter of 2006 and ball volumes 
continue to grow satisfactorily. The 
investment programme continued 
throughout the year and important  
new machinery for tube production and 
decoration has been ordered for delivery  
in the first half of 2007. 
A minor expansion at one of the two 
Globalpack locations will facilitate a  
partial plant re-layout and an increase in 
warehouse space to drive the programme 
of productivity and service improvement.
Globalpack’s recovery is expected to 
continue into 2007.
www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 15 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 14
Despite tough trading conditions 
Consumer Packaging delivered a much improved 
performance in the second half of the year Globalpack
Globalpack’s flexible tubes and closures are used 
for many Brazilian toiletries and cosmetic brands 
and Globalpack has the capacity to produce  
135 million tubes each year 
www.filtrona.com 15 Filtrona plc  Annual Report and Accounts 2006 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 15 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 14
Plastic Technologies
Consumer Packaging
Globalpack
Globalpack’s flexible tubes and closures are used 
for many Brazilian toiletries and cosmetic brands 
and Globalpack has the capacity to produce  
135 million tubes each year www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 17 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 16
Business Review
Chief Executive’s Review
Fibre Technologies
Fibre Technologies achieved good revenue 
growth in the year of 5.9% to £254.7m 
(2005: £240.4m). Operating profit before 
intangible amortisation which was flat at the 
half year, improved in the second half  
to deliver a full year increase of 4.5% to 
£28.1m (2005: £26.9m). The operating 
margin reduced to 11.0% (2005: 11.2%). 
Revenue per employee increased by 0.8% 
to £106,792 (2005: £105,903) whilst 
operating profit before intangible 
amortisation per employee decreased by 
0.6% to £11,782 (2005: £11,850).
In Cigarette Filters, total volumes reduced  
by 1.6% or 1.1 billion filter rods with the  
increase of 14.1% in special filters volumes 
offset by a reduction of 19.0% in 
monoacetate filters. In response to changing 
customer demands, the strategy for the 
business has evolved with an increased 
focus on the research and development of 
innovative and more complex filter solutions 
to complement the core manufacturing 
capability. Much progress was made during 
2006 in strengthening the management 
team, including the recruitment of two  
senior level operations specialists to drive 
improvement in factory performance.
In the Americas, overall revenue was flat  
as growth in North America was offset by  
a decline in South America. The losses 
incurred by the Monterrey facility in the first 
half of the year were substantially reversed  
in the second half due to productivity gains. 
Although the full year position remained loss 
making, the operation moved into profit in 
the fourth quarter. 
Revenue and operating profit grew in Europe 
as performance at the UK facility improved 
with productivity gains derived from the 
development of manufacturing expertise in 
the products formerly manufactured in 
Switzerland. An important European 
customer launched a new brand into
the Polish market featuring Filtrona’s 
proprietary Active Patch™ technology 
as the product differentiator. 
In Asia, strong revenue and profit growth 
was achieved. The transfer of the Indonesian 
business to a new and larger facility was 
successfully completed in the early part of 
the year and volumes produced in Indonesia 
were up 94.2% from 2005. 
The market conditions for the Cigarette 
Filters business in 2007 will remain 
challenging as customers respond to 
mature and declining Western markets  
with significant capacity reconfiguration. 
Customer discussions have confirmed  
that Filtrona will experience a reduction in 
volumes of conventional carbon dual filters 
during 2007 which will impact the 
Company’s facilities in both North America 
and Europe. Significant plant restructuring 
is under way to reduce costs and improve 
productivity. These actions, together with 
increased volumes in Asia, will mitigate  
the impact from the reduction in activity. 
The plant restructuring will result in an 
anticipated charge of £5m in 2007. 
Filtrona remains confident in the future 
prospects for the Cigarette Filters business 
due to the growing demand for innovative 
filters for PREPs (potentially reduced 
exposure products) and other differentiated 
tobacco smoking products and for 
research and development services. To this 
end, increased investment is planned in 
2007 to strengthen the research and 
development capability and to continue the 
progressive movement of production to 
lower cost regions.
Increased investment is planned in 2007  
to strengthen Cigarette Filters’ research  
and development capability www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 17 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 16
Fibre Technologies
Cigarette Filters
Carbon filters
Carbon filters are becoming increasingly popular 
in a number of markets around the world.  
Filtrona uses circa 5 million kg of granular 
carbon each year www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 19 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 18
Bonded Fibre Components continued  
to make important progress. Fibertec 
strengthened its position in its core markets 
through the development of new products 
and technologies and also experienced 
good growth in Asia. 
The Ningbo facility moved into profit as 
productivity and quality improved and  
ISO 9000:2000 accreditation was achieved 
during the year. Volumes in China 
continued to grow following production 
transfers and the development of new 
business won in the region. The pace of 
progress at Ningbo has generated the need 
for a plant expansion and construction of  
a factory extension began late in the year 
for completion in the third quarter of 2007.
The recovery of volumes in household 
products continued throughout the year  
and was assisted by customer requirements 
for multiple wicking devices in air fresheners 
which provide a selection of fragrances in 
one unit. The writing instrument product 
segment progressed well and important 
business was won in Europe and Asia  
from a principal competitor. The Reinbek, 
Germany facility performed strongly due  
to improved activity levels and the impact  
of the cost reduction programme which 
commenced in 2005. A plant upgrade 
programme at Reinbek has now begun.  
The research and development centre in 
Richmond continued to develop potentially 
valuable technologies for the medical device 
market and eleven patents were filed during 
the year.
A key customer in the pregnancy test kit 
market signed a long term contract with 
Fibertec for the supply of wicks. During 
2007 it is expected that the business will 
benefit from important new product 
introductions both in the medical and fibre 
inkjet printer reservoirs product sectors. 
Filtrona has been selected as the exclusive 
supplier of fibre reservoirs by a major US 
corporation for its entry into the inkjet  
printer market. 
People
Filtrona has 5,600 employees operating 
from 37 manufacturing facilities and 32 
distribution units in 23 countries around  
the world. During 2006, revenue per 
employee improved by 1.7% to £99,434 
and operating profit before intangible 
amortisation per employee improved  
by 2.3% to £11,255.
In support of the Company’s strategic 
objectives, Filtrona is committed to the 
recruitment, retention and development  
of the very best people commensurate  
with the Company’s scale and resources. 
The Company believes that a cultural 
environment, based on a clear set of 
Filtrona values, where employees are 
committed, involved and recognised  
for their achievements, is conducive  
to excellent business performance.
Since the demerger in June 2005, the 
Company has increased its management 
training programmes and has introduced  
a structured approach to succession 
planning together with a revised personal 
development review for performance 
evaluation. The Company operates a 
formalised graduate recruitment and 
training programme which runs over a 24 
month period and is designed to provide 
participants with core management skills. 
These programmes will develop high potential 
individuals who will be part of the future 
management team within Filtrona.
The Company remains fully committed  
to improving its health, safety and 
environmental performance and it  
is intended that all principal Filtrona 
manufacturing locations will be accredited 
to OSHAS 18001 by the end of 2008. This 
is in addition to the ISO 9000 and 14000 
standard accreditations already held.  
More information on the Company’s  
health, safety and environmental policies  
is contained in the Corporate Social 
Responsibility Statement on pages  
46 to 48.
Mark Harper
Chief Executive
1 March 2007
Business Review
Chief Executive’s Review
Fibertec has been selected as the exclusive 
supplier of fibre inkjet printer reservoirs by a 
major US corporation Medicine dispensing straw 
This patented drug delivery system, which is 
dependent on fibre components for its 
correct functioning, provides an effective 
method for delivering drugs. Each fibre 
is approximately one quarter of the 
thickness of a human hair
www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 19 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 18
Fibre Technologies
Bonded Fibre Components www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 20
Business Review
Financial Review
Steve Dryden
Revenue
Revenue increased by 5.9% to £544.2m, 
and, in the absence of any benefit from 
acquisitions, this organic growth was in 
excess of historical rates.
Operating profit
Operating profit before intangible 
amortisation and demerger expense 
increased by 6.6% to £61.6m. Adjusting  
for the additional central service cost of 
£1.1m as a result of being demerged for  
a full financial year in 2006, and the £0.2m 
impact of foreign currency translation, gives 
underlying operating profit growth of 9.0%.
Operating profit before intangible 
amortisation per employee grew by 2.3%  
to £11,255 (2005: £11,003).
Adjusted earnings per share
Earnings increased by 9.2% to £34.5m.  
The weighted average number of shares of 
218.8m (2005: 219.1m) gives a 9.7% increase 
in basic earnings per share to 15.8p. 
Adjusting for intangible amortisation of £0.9m 
(2005: £0.8m) and demerger expense of £nil 
(2005: £1.0m) less tax relief thereon of £0.3m 
(2005: £0.6m) gives an increase in adjusted 
earnings per share of 6.7% to 16.0p.
Finance expense
The net finance expense has increased  
by £0.1m to £6.1m as a result of higher 
average interest rates, largely offset by 
focused working capital management to 
reduce net debt levels. Net finance expense 
was covered 10.1 times by operating profit 
before intangible amortisation.  +5.9% +6.6% +9.2%
+6.7% +7.8%
£544.2m
2004 477.5
2005 513.7
2006 544.2
120.0
120.2
98.8
£61.6m
2004 53.1
2005 57.8
2006 61.6
16.0p
2004
2005
2006
6.9p
2004*
2005
2006
£98.8m
2004
2005
2006
£54.6m
2004 45.7
2005 50.0
2006 54.6
14.0
15.0
16.0
5.9
6.4
6.9
Revenue Operating proﬁt
Δ
Proﬁt before tax
Net debt Adjusted earnings per share
†
Dividend per share
#
+5.9% +6.6% +9.2%
+6.7% +7.8%
£544.2m
2004 477.5
2005 513.7
2006 544.2
120.0
120.2
98.8
£61.6m
2004 53.1
2005 57.8
2006 61.6
16.0p
2004
2005
2006
6.9p
2004*
2005
2006
£98.8m
2004
2005
2006
£54.6m
2004 45.7
2005 50.0
2006 54.6
14.0
15.0
16.0
5.9
6.4
6.9
Revenue Operating proﬁt
Δ
Proﬁt before tax
Net debt Adjusted earnings per share
†
Dividend per share
#
+5.9% +6.6% +9.2%
+6.7% +7.8%
£544.2m
2004 477.5
2005 513.7
2006 544.2
120.0
120.2
98.8
£61.6m
2004 53.1
2005 57.8
2006 61.6
16.0p
2004
2005
2006
6.9p
2004*
2005
2006
£98.8m
2004
2005
2006
£54.6m
2004 45.7
2005 50.0
2006 54.6
14.0
15.0
16.0
5.9
6.4
6.9
Revenue Operating proﬁt
Δ
Proﬁt before tax
Net debt Adjusted earnings per share
†
Dividend per share
#
www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 21
Operating cash flow covered net finance 
payments 7.8 times as Filtrona continued  
to invest capital expenditure ahead  
of depreciation.
Operating margin
The overall operating margin, before 
intangible amortisation and demerger 
expense incurred in 2005, remained level  
at 11.3%. The operating margin in Plastic 
Technologies increased to 14.3% (2005: 
13.8%) while the Fibre Technologies’ margin 
reduced to 11.0% (2005: 11.2%) as a result 
of higher than anticipated costs in Mexico to 
achieve the appropriate levels of quality and 
productivity in the first half of 2006.
Tax
The tax charge of £18.6m represents an 
effective tax rate of 34.1% (2005: 34.0%)  
on the profit from underlying operations. 
The effective rate is higher than the nominal 
UK rate of 30.0% because most of the 
Company’s operations are in countries  
with higher tax rates.
Dividends
An interim dividend of 2.3p (2005: 2.13p) 
per share and a final proposed dividend of 
4.6p (2005: 4.27p) per share will deliver an 
increase of 7.8%, at a total cost of £15.1m, 
with dividend cover, based on adjusted 
earnings per share, of 2.3 times. £34.5m 
will be transferred to reserves, including 
£10.1m required for the payment of the  
final dividend.
Balance sheet
Total assets less current liabilities decreased 
by £15.5m to £311.8m. Principal drivers of  
this decrease were currency translation of 
£18.3m, and net capital expenditure (capital 
expenditure ahead of depreciation) of £9.6m, 
offset by decrease in cash and cash 
equivalents of £4.8m.
Return on average operating capital employed 
before intangible amortisation increased 0.1% 
to 23.8%.
Net debt fell by £21.4m to £98.8m and the 
ratio of net debt to earnings before interest, 
tax, depreciation and amortisation reduced 
from 1.5 in 2005 to 1.2 in 2006.
Intangible assets
Intangible assets decreased by £3.5m 
reflecting customer lists accruing in the  
year of £0.6m, less a foreign exchange 
movement of £3.2m and amortisation  
of £0.9m.
Cash flow
Net cash inflow from operating activities was 
£61.1m, a 7 .4% increase compared to 2005 
as the Company recovered much of the 
previous year’s additional working capital 
increase. Principal elements of the £34.3m 
capital expenditure were the completion of 
new production facilities in the Plastic Profile 
and Sheet businesses in Mexico and the 
Netherlands, in addition to other productivity 
enhancing investments.
Net cash inflow before financing activities 
was £28.6m (2005: £15.8m). Cash inflow 
for 2006 was £7.1m and, after foreign 
exchange benefit of £14.3m, net debt  
fell by £21.4m to £98.8m.
Pensions
At 31 December 2006, the Company’s  
IAS 19 (revised) gross pension liability
was £30.9m (2005: £35.8m) with a net 
liability of £21.7m (2005: £25.0m) after 
accounting for a deferred tax asset of 
£9.2m (2005: £10.8m). 
An independent actuarial valuation was 
conducted as at 5 April 2006. This was the 
first full such valuation since the demerger. 
At 31 December 2006 the funding position 
showed a decrease in the deficit of £4.9m as 
a result of the adoption of revised mortality 
rates (£14.8m increase), improved market 
returns (£5.5m decrease) and the effect of 
updated discount rates and other 
assumptions (£14.2m decrease).
The Company is in discussion with the 
pension trustees regarding future funding.
Treasury policy and controls
Filtrona has a centralised treasury department 
to control external borrowings and manage 
exchange rate risk. Treasury policies  
are approved by the Board and cover the  
nature of the exposure to be hedged, the 
types of financial investments that may  
be employed and the criteria for investing  
and borrowing cash. 
r before intangible amortisation and demerger expense
†
 before intangible amortisation and demerger expense less tax relief thereon
Key Performance Indicators +7 .4% +2.3% 1 1 .3%
2004 11. 1
2005 1 1.3
2006 11.3
£61 . 1 m
2004 50.9
2005 56.9
2006 61.1
£1 1 ,255
2004 10, 174
2005 1 1 ,003
2006 11,255
Operating margin Operating cash ﬂow Operating proﬁt per employee
Δ
Δ
before intangible amortisation
www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 22
Business Review
Financial Review
The Company uses derivatives only to 
manage foreign currency and interest rates 
risk arising from underlying business 
activities. No transactions of a speculative 
nature are undertaken. The department is 
subject to independent review by the internal 
audit department. 
Underlying policy assumptions and activities 
are reviewed by the Executive Directors.
Controls over exposure changes and 
transaction authenticity are in place and 
dealings are restricted to those banks with 
the relevant combination of geographic 
presence, expertise and suitable credit 
rating. Filtrona continuously monitors the 
credit ratings of counterparties and its 
credit exposure to each counterparty.
Liquidity risk
Filtrona’s objective is to maintain a balance 
between continuity of funding and flexibility. 
The Company is funded by a multi-currency 
syndicated facility from its bankers. The 
syndicated facility matures in May 2010.  
At 31 December 2006 the available bank 
facilities totalled £215.0m of which £117 .8m 
was drawn down. In addition, uncommitted 
and overdraft facilities are maintained to 
provide short-term flexibility.  
 
Foreign currency risk
The majority of Filtrona’s net assets are  
in currencies other than sterling. The 
Company’s policy is to limit the translation 
exposure and the resulting impact on 
shareholders’ funds by borrowing in those 
currencies in which it has significant net 
assets and by using forward foreign 
exchange contracts. At 31 December  
2006 there were no material currency 
exposures after accounting for the effect  
of hedging transactions.
Throughout the year borrowings were 
primarily held in US dollars and sterling.  
The Company does not hedge the translation 
effect of exchange rate movements on the 
income statement.
The majority of Filtrona’s transactions are 
carried out in the functional currencies of its 
operations and so transaction exposure is 
limited. However, where they do occur, the 
Company’s policy is to hedge the 
exposures as soon as they are committed 
using forward foreign exchange contracts.
Principal Exchange Rates
  Average    Closing 
  2006  2005  2006  2005 
US$: £ 1.85  1.81  1.96  1.72 
€:£  1.47 1.47 1.48 1.46 
The differences between the average and 
closing exchange rates, particularly the US 
dollar, are such that were the results for the 
year ended 31 December 2006 translated 
at the closing rates rather than at the 
average rates, revenue would be reduced 
by £17.7m and operating profit by £2.2m.
Interest rate risk
Filtrona’s strategy is to ensure with a 
reasonable amount of certainty that the 
overall net finance expense is protected 
against material adverse movements in 
interest rates. Interest rate swaps are used 
to fix the short-term interest rate on a part 
of the borrowings and interest rate caps are 
also in place to reduce the Company’s 
floating rate exposure to adverse movement 
in market rates.
Steve Dryden
Finance Director
1 March 2007
Key Performance Indicators www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 23 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 23
Business Review
Analysis of Principal Risks
In any business there are a number of risks and uncertainties 
which could have an impact on its long-term performance. 
Filtrona has a risk management process in place which is 
designed to identify, manage and mitigate business risk.
Filtrona recognises that the risks and uncertainties facing its business 
are constantly changing and has embedded risk management into its 
business processes.
Risk assessment, evaluation and mitigation are essential parts of the 
annual planning cycle and important aspects of the Filtrona internal 
control system.
The ability to monitor, assess and respond to these business risks can 
often provide competitive advantage and hence Filtrona’s resources 
are carefully managed in this area. More details of the Company’s risk 
management processes are set out in the Corporate Governance 
Report on page 45.
Risk
Disruption to distribution or production facilities and 
information systems
Filtrona would be adversely affected if there was a significant failure 
of one or more of its major production facilities, including the loss 
of tooling or of a major part of its supply chain. Disruption may be 
caused by industrial disputes, fire, information systems failure or 
other material business interruption.
Management response
Disruption to distribution or production facilities and 
information systems
Many of Filtrona’s manufacturing processes are carried out in more 
than one location and hence the Company has the ability to 
mitigate this risk in part by meeting production requirements with 
the use of alternative manufacturing sites.
The Company continues to invest in the provision of fire protection 
systems to minimise the risk of tooling losses.
Risk
Identification and successful integration of acquisitions
The rate of any future growth that Filtrona may achieve will in part be 
dependent on making acquisitions. Filtrona has in the past made 
and successfully integrated a number of acquisitions but there can 
be no assurance that Filtrona will be able to identify, complete and 
integrate successfully suitable acquisitions in the future.
Management response
Identification and successful integration of acquisitions
Filtrona has a central corporate development team focused on 
identifying and completing the acquisition of value enhancing 
businesses in selected niche markets. The corporate development 
team reports regularly to the Executive Committee and Board. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 24
Business Review
Analysis of Principal Risks
Risk
Retirement benefits
Volatile capital markets could create a shortfall in funding of  
retirement benefits. Filtrona maintains various retirement benefit plans 
for employees that are funded through investments in equities, bonds 
and other investments, the value of which is dependent on world 
markets. Filtrona may be required to provide additional funding to cover 
any shortfalls in the benefit plan funding, arising from falls in the value of 
these investments. Any significant additional funding requirements 
could adversely impact the Company’s financial position. There is a risk 
that increasing life expectancy and falling equity and bond returns will 
result in a significant rise in Filtrona’s liabilities.
Management response
Retirement benefits
The major schemes are regularly reviewed in consultation with 
independent actuaries and pension trustees to ensure that costs 
are controlled and that employee benefits are reasonable and 
competitive. Actions are taken when required.
Risk
Competitive pressures
Filtrona’s niche market positions may be impacted by the 
competitive actions of third parties.
Management response
Competitive pressures
Filtrona actively works with its customers and suppliers to find 
innovative ways to meet changing demands in order to remain at 
the forefront of its selected markets. Filtrona’s reputation and value 
proposition centres around service, expertise and the breadth of 
the product offering rather than one of strictly competing on price.
Risk
Product liability claims
Like any other manufacturer, Filtrona faces the inherent risk of 
exposure to product liability claims if the products supplied by 
Filtrona fail to meet specification or the required standard.  
If Filtrona does not have adequate insurance, product liability 
claims and costs associated with product recalls, including loss of 
business, could have a material adverse effect on Filtrona’s 
business, its operating results and its financial position.
Management response
Product liability claims
Filtrona has quality assurance systems designed to ensure the 
highest standards for its customers. Filtrona currently maintains 
product liability insurance at levels thought to be appropriate in 
relation to the products manufactured or sold by the Company, 
with the exception of cigarette filters, for which product liability 
insurance, as for other cigarette components, is not available. 
There can be no guarantee that this insurance will continue to be 
available at reasonable cost or will be adequate to cover product 
liability claims against Filtrona.
Risk
Customer base
In some of Filtrona’s businesses, the market, and hence the 
customer base, is relatively concentrated. This is true primarily of 
Filtrona’s cigarette filter and tear tape businesses. Should the 
customers of Filtrona decide to satisfy their requirements internally 
or from other suppliers, and if Filtrona were unable to win other 
customer orders, this could result in a significant loss of business 
and a resulting adverse effect on Filtrona’s operating results.
Management response
Customer base
The development of further innovative products and services 
should strengthen Filtrona’s reputation and relationships across  
its customer base. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 25
The principal risks faced by Filtrona and its management 
response thereto are summarised in this analysis. Not all 
these factors are within the Company’s control. There may 
be other risks and uncertainties which are unknown to the 
Company or which may not be deemed material now but 
which could turn out to be material in the future.
Risk
Relationship with the tobacco industry
A significant part of Filtrona’s business relates to the supply of 
cigarette filters and tear tape to manufacturers in the tobacco 
industry. Accordingly the future performance of Filtrona’s cigarette 
filters and tear tape businesses may be affected by changes in 
conditions within those sections of the tobacco industry which  
they supply, such as in the consumption of cigarettes, demand  
for different types of cigarette and in regulations affecting 
cigarettes. Whilst Filtrona has no history of involvement in tobacco 
related litigation, it could be adversely affected by the incidence  
of such litigation.
Management response
Relationship with the tobacco industry
Filtrona’s strategy is continually to offer innovative added value 
products and services targeted towards growth areas within the 
tobacco industry. Faster growing non tobacco businesses may 
reduce Filtrona’s exposure to this risk over time and there is 
currently no reason to believe that regulation specific to the 
tobacco industry is likely to cause a material adverse or rapid 
change in demand for Filtrona’s cigarette filters and tear tape.
Risk
International operations
Filtrona has principal operations in North America and Europe 
together with facilities in Asia and South America. There are 
particular risks arising from managing operations internationally 
including:
fluctuations in currency exchange rates may affect the reported 
operating results and financial position;
changes in tax regulation and international tax treaties could 
affect the financial performance of foreign operations; and
changes in other regulations/treaties may also affect the ability of 
Filtrona to repatriate profits from its foreign operations.
The Company’s strategy involves manufacture in low cost  
production locations. Filtrona may be adversely affected by political 
and economic conditions in some of these production locations. 
Transition towards these locations may also give rise to other 
execution risks normally associated with such moves, including delays 
to the start of production, product quality and the establishment of 
new distribution channels and other unforeseen factors.
•
•
•
Management response
International operations
Filtrona believes that the benefits of its geographical spread 
outweigh the associated risks. The portfolio effect of economic 
conditions, exchange rates and other associated factors of having 
operations worldwide provide some protection in terms of the long-
term performance of Filtrona.
The Company seeks to manage its foreign currency risk and the 
steps it takes are described in the Financial Review on pages 20  
to 22. The Company actively works with its taxation advisors to 
minimise its tax exposure and risk.
The risk management processes within the Company seek to identify 
and mitigate the risks associated with any transition to new facilities.
Filtrona continually seeks opportunities to increase its business 
diversity and has programmes in place to share best practice 
across its international operations. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 26 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 26
Board of Directors www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 27
Jeff Harris
Non-executive Chairman
Jeff Harris was appointed Chairman in  
May 2005. He was chairman of Alliance 
UniChem Plc from 2001 until 2005. Jeff 
was the finance director of UniChem Plc 
from 1986 to 1992, chief executive from 
1992 and chief executive of the enlarged 
Alliance UniChem Plc from 1997 to 2001. 
Jeff is also a non-executive director of 
Associated British Foods plc, Bunzl plc  
and Anzag AG. Jeff is the Chairman of  
the Company’s Nomination Committee.
Paul Drechsler
Senior Independent 
Non-executive Director 
Paul Drechsler was appointed as a Non-
executive Director of Filtrona in May 2005. 
He is chairman and chief executive of 
Wates Group, having been appointed to 
the position of chief executive in 2004.  
Prior to this, Paul spent 25 years at Imperial 
Chemical Industries PLC where his 
experience included chairmanship of the 
ICI pension fund and appointment to the 
ICI board as an executive director in 1999. 
Paul is Chairman of the Company’s 
Remuneration Committee.
Mark Harper
Chief Executive 
Mark Harper joined Filtrona in 1986 and 
held a number of general management 
positions, including managing director of 
Moss Plastic Parts in Europe and president 
of Alliance Plastics in the US, before 
becoming Managing Director of Filtrona in 
1996. Mark was an executive director of 
Bunzl plc from 2004 until he was appointed 
Chief Executive of Filtrona in May 2005. 
With effect from 1 December 2006 Mark 
was appointed as a non-executive director 
of BBA Aviation plc.
Adrian Auer
Non-executive Director 
Adrian Auer was appointed a Non-
executive Director of Filtrona in May 2005. 
He was formerly group finance director of 
RMC Group plc from 2002 to 2005, finance 
director of Taylor Woodrow plc from 2000 
to 2002, and has also held senior finance 
positions with BP and ICI. Adrian is 
currently non-executive chairman of 
Shanks plc and Readymix plc, and is a 
non-executive director of Foseco plc.
Adrian is Chairman of the Company’s 
Audit Committee.
Steve Dryden
Finance Director 
Steve Dryden was appointed Finance 
Director of Filtrona in May 2005. Prior to 
that he was divisional finance director of  
the Filtrona businesses between 2002 and 
2005, and was finance director of a group 
of the Plastic Technologies businesses 
between 1999 and 2002 and Moss Plastic 
Parts between 1996 and 1998. Steve’s 
career began at Price Waterhouse and, 
before joining Filtrona, he held various 
finance roles within Rolls-Royce plc. 
Warren Knowlton
Non-executive Director 
Warren Knowlton was appointed a Non-
executive Director of Filtrona in June 2006. 
He is chief executive officer of Graham 
Packaging Company L.P. having been 
appointed in December 2006. Warren 
spent his earlier career with Owens Corning 
in a variety of senior executive positions. 
From 1997 to 2002 he was an executive 
director of Pilkington plc and from January 
2003 to August 2006 he was chief 
executive officer of The Morgan Crucible 
Company plc. Warren is a non-executive 
director of Smith & Nephew plc, and 
Ameriprise Financial Inc.
Jeff 
Harris
Mark 
Harper
Steve 
Dryden
Paul 
Drechsler
Adrian 
Auer
Warren 
Knowlton  Governance
29 Directors’ Report
33 Report of the Remuneration Committee 
41 Corporate Governance Report
46 Corporate Social Responsibility Report
 Financial Statements
49 Consolidated income statement
50 Consolidated balance sheet
51 Consolidated statement of cash flows
52 Consolidated statement of recognised  
income and expense
53 Accounting policies
58 Notes
80 Independent Auditor’s Report to the members 
of Filtrona plc
81 Filtrona plc balance sheet
82 Accounting policies
83 Notes 
86 Independent Auditor’s Report to the members 
of Filtrona plc
 Shareholder Information
87 Advisors’ details and investor information
88 Financial calendar 2007
www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 28 Filtrona plc  Annual Report and Accounts 2006 29 www.filtrona.com
Directors’ Report
for the year ended 31 December 2006
The Directors present their Report and audited financial statements of the Company and its subsidiary undertakings for the year 
ended 31 December 2006.
Principal activities and business review
The principal activities of Filtrona are the light manufacture and supply of speciality plastic and fibre products.
The principal activity of the Company is a holding company.
The information which fulfils the requirements of the Business Review and should be treated as forming part of this Report is included in 
the Chairman’s Statement on pages 04 and 05, the Chief Executive’s Review on Pages 06 to 19, the Financial Review on pages 20 to 22, 
the Analysis of Principal Risks on pages 23 to 25 and in the Corporate Social Responsibility Report on pages 46 to 48.
 
Key Performance Indicators
Key Performance Indicators are set out in the Financial Review on pages 21 and 22.
Results and dividends
The accompanying financial statements for the year ended 31 December 2006 which were approved by the Board of Directors on 
1 March 2007 are set out on pages 49 to 86.
The Company has paid the following dividends in respect of the year ended 31 December 2006:
       Per share  Total
       p £m
Interim paid 27 October 2006       2.3 5.0
The Directors recommend that a final dividend of 4.6p (2005: 4.27p) per share be paid, making a total dividend distribution for the year 
of 6.9p (2005: 6.4p).
The final dividend of 4.6p, subject to shareholder approval, will be paid on 4 May 2007 to shareholders on the register at 10 April 2007. 
Directors and their interests
During the year ended 31 December 2006 the Board of Directors comprised:
Jeff Harris  Non-executive Chairman 
Mark Harper  Chief Executive 
Steve Dryden  Finance Director 
Paul Drechsler  Senior Independent Non-executive Director 
Adrian Auer  Non-executive Director 
Warren Knowlton  Non-executive Director (appointed 1 June 2006)
Paul Heiden  Non-executive Director (resigned 26 April 2006)
Directors’ interests in the issued ordinary share capital of the Company are detailed in the Report of the Remuneration Committee on 
page 40.
 
In accordance with the Company’s Articles of Association, Jeff Harris and Adrian Auer are retiring by rotation at the forthcoming Annual 
General Meeting (‘AGM’) and, being eligible, offer themselves for re-election. Warren Knowlton will retire as a Director of the Company with 
effect from the conclusion of the AGM. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 30
Directors’ Report
Share capital
The authorised and issued share capital of the Company is shown in note 18 to the financial statements.
Substantial shareholders
At the close of business on 1 March 2007, the Company was advised of the following notifiable interests in the issued ordinary share 
capital of the Company: 
        % of issued
        ordinary
Shareholder        share capital
Amvescap Plc        16.02
Legal & General Investment Management Limited        13.48
Ivory Investment Management LP        8.00
Ameriprise Financial Inc        5.86
Pennant Capital Management LLC        4.75
Zurich Assurance Limited        3.98
Property values
In the opinion of the Directors there was no significant difference between the market and book values of the property held by the Group, 
as shown in the consolidated balance sheet at 31 December 2006.
Charitable and political contributions
The Company made no political contributions during the year (2005: £nil). Donations to UK charities amounted to £0.1m (2005: £0.1m), of 
which £nil were made by the Company (2005: £nil), with all contributions being made by its subsidiary companies.
Directors’ indemnities
As at the date of this Report, indemnities are in force under which the Company has agreed to indemnify the Directors and the Company 
Secretary, in addition to other senior executives who are directors of subsidiaries of the Company, to the extent permitted by law and the 
Company’s Articles of Association, in respect of all losses arising out of or in connection with the execution of their powers, duties and 
responsibilities as a director or officer of the Company or any of its subsidiaries.
Employees
Filtrona is guided by its aim to deliver a competitive and fair employment environment and the opportunity to develop and advance 
employees subject to personal performance and business opportunity. 
Filtrona encourages its employees to develop and manage their own careers. It facilitates this by providing relevant job training and, where 
appropriate, aiming to fill vacancies with existing staff where employees are suitably qualified and experienced.
 
Filtrona supports the principle of equal employment opportunity and is opposed to all forms of discrimination on the grounds of sex,  
race, nationality, ethnic or national origin, religion, marital status, sexual orientation, disability or age. Filtrona companies conduct their 
businesses in a way that seeks to ensure individuals are treated equally and fairly and that all employment, training and career 
development decisions are made on job-based criteria. 
Employees’ involvement
Filtrona’s policy is to communicate with employees to ensure understanding of the businesses and of the impact business decisions have 
on employees. Filtrona is keen to obtain feedback and ideas from employees to improve the operation of the business.
Creditor payment policy
The Company policy for payment to suppliers is to pay to terms agreed with suppliers from time to time, subject to the supplier’s 
performance in accordance with agreed terms and conditions.
Since the Company has no trade creditors, the disclosure of creditor days does not apply. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 31
Annual General Meeting
The AGM of the Company will be held at the Holiday Inn Hotel, 500 Saxon Gate West, Milton Keynes, Buckinghamshire MK9 2HQ on 
Monday, 30 April 2007 at 12 noon.
In addition to the ordinary business of the AGM, resolutions in respect of the following matters of special business are included in the 
Notice of Annual General Meeting:
Authority to allot unissued shares
The Directors will, under Resolution 7 in the Notice of Annual General Meeting, seek power until the next AGM to allot shares up to an 
aggregate nominal amount of 5% of the issued share capital at 1 March 2007, equivalent to 10,966,300 shares. The proposal conforms 
with the guidelines issued by the institutional investment protection bodies to ensure that existing shareholders’ interests are safeguarded. 
The Directors have no present intention of exercising their authority to allot unissued shares, except those relating to share options.
Allotment of shares for cash
The Directors will, under Resolution 8 in the Notice of Annual General Meeting, seek power until the next AGM to allot shares for cash, 
otherwise than in accordance with the statutory pre-emption rights, either in connection with a pre-emptive offering or otherwise, up 
to an aggregate nominal amount of 5% of the issued share capital at 1 March 2007, equivalent to 10,966,300 shares. The proposal 
conforms with the guidelines issued by the institutional investment protection bodies to ensure that existing shareholders’ interests 
are safeguarded. 
 
Purchase of own shares
The Directors consider it expedient to seek shareholders’ approval to enable the Company to purchase its own shares. Accordingly, 
under Resolution 9 in the Notice of Annual General Meeting, authority will be sought to enable the Company to make market purchases 
of up to 10% of the issued share capital at 1 March 2007 for the period of one year following the date of passing the resolution. In 
accordance with the requirements of The Listing Rules of the Financial Services Authority, the maximum price for shares purchased in the 
market shall not exceed an amount equal to 105% of the average middle market quotation taken from the London Stock Exchange Daily 
Official List for the five business days before the purchase is made. The minimum price per share shall be not less than 25p, being the 
nominal value of the shares. The Directors will only utilise this authority if satisfied that to do so will result in an increase in earnings per 
share and that it is in the best long-term interests of the shareholders. 
Auditor
KPMG Audit Plc have indicated that they are willing to continue in office. A resolution to re-appoint them, and to authorise the Board to set 
their remuneration, will be proposed at the AGM (Resolution 6 in the Notice of Annual General Meeting).
Recommendation
The Directors believe that the resolutions in the Notice of Annual General Meeting are in the best interests of the Company and its 
shareholders as a whole and unanimously recommend that shareholders vote in favour of each resolution.
Compliance with the Combined Code
During the year ended 31 December 2006 the Company did not fully comply with the Code in that the posting of the Notice for the 
Company’s first AGM and related papers to the shareholders did not take place at least 20 working days before the meeting.
Financial Instruments 
The information related to financial instruments is included in the Accounting Policies on page 54 and in note 14 on page 68.
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  
the Directors are required to prepare the Group financial statements in accordance with International Financial Reporting Standards 
(‘IFRS’) as adopted by the European Union (‘EU’) and have elected to prepare its individual company financial statements in accordance 
with United Kingdom Generally Accepted Accounting Principles and applicable Iaw. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 32
Directors’ Report
The Group financial statements are required by law and IFRSs as adopted by the EU to present fairly the financial position and 
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 judgements 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.
The Directors are also responsible for preparing a Directors’ Report, a Report of the Remuneration Committee and a Corporate 
Governance Report in compliance with applicable law and 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.
Directors’ Statement as to Disclosure of Information to the Auditor
The Directors who were members of the Board at the time of approving this Directors’ Report, having made enquiries of fellow Directors 
and of the Auditor, confirm that:
to the best of each Director’s knowledge and belief, there is no information relevant to the preparation of their report of which the 
Auditor is unaware; and
each Director has taken all steps a Director might reasonably be expected to have taken to be aware of relevant audit information and 
to establish that the Company’s Auditor is aware of that information.
By order of the Board
Jon Green
Company Secretary
1 March 2007
•
•
•
•
•
•
• www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 33
This Report to shareholders for the year ended 31 December 2006 sets out the policies under which Executive and Non-executive 
Directors were remunerated and tables of information showing details of the remuneration and share interests of all the Directors.
As required by The Directors’ Remuneration Report Regulations 2002 (‘the Regulations’), this Report will be subject to an advisory 
shareholder vote at the AGM. The Report is intended to be in full compliance with the requirements of the Regulations. KPMG Audit Plc 
have audited the contents of the Report to the extent required by the Regulations (pages 33 to 40).
The Remuneration Committee
The Remuneration Committee is responsible for making recommendations to the Board on remuneration policy as applied to Filtrona’s 
senior executives, including Executive Directors. It consists wholly of independent Non-executive Directors: Paul Drechsler (who chairs the 
Remuneration Committee), Adrian Auer and Warren Knowlton.
The Chairman, Chief Executive and Director of Group Human Resources of the Company may, by invitation, attend the Remuneration 
Committee meetings, except when their own remuneration is discussed.
The Remuneration Committee met four times during the year.
Remuneration policy
The Board as a whole establishes remuneration policy. The Remuneration Committee determines and recommends to the Board the 
framework of Board policy for the remuneration of the Executive Directors. It also ratifies the Chief Executive’s remuneration proposals for 
the members of the Executive Committee and for other senior executives reporting directly to him. The Remuneration Committee also 
takes note of the remuneration policy and details (as set by the Chief Executive) in respect of other levels of management in the Company.
The remuneration of the Executive Directors and Chairman is the responsibility of the Remuneration Committee and the remuneration  
of the Non-executive Directors is the responsibility of the Board as a whole. No Director is involved in determining or voting on their  
own remuneration.
In determining the policy for the Executive Directors, the Remuneration Committee’s objective is to ensure that those individuals are 
provided with appropriate incentives to encourage enhanced performance and are, in a fair and responsible manner, having regard to the 
performance of the Company, rewarded for their individual contributions to the success of the Company.
The objective of the remuneration policy is to provide remuneration in a competitive form and amount to attract, retain and motivate high 
quality management. The importance of aligning the interests of Executive Directors and senior executives with shareholders is carefully 
considered, particularly in the design of the performance-related elements of their remuneration packages.
Advice
During the year ended 31 December 2006, Filtrona’s Director of Group Human Resources was invited by the Remuneration Committee to 
provide views and advice.
In addition, with the approval of the Remuneration Committee, the Company received services and advice from the following independent 
and expert consultants:
New Bridge Street Consultants LLP who provided advice on the structure and rules of the Company’s long-term share 
incentive plans.
Monks Partnership who provided advice on the remuneration of the Executive Directors and other senior executives within 
the Company.
Mercers Human Resource Consulting who provided advice and information on pension matters.
Components of executive remuneration
Remuneration is reviewed in December each year and is established with reference to the remuneration offered to senior executives with 
similar roles, taking proper account of the particular responsibilities, skills, performance and experience required for the executive role 
within the Company. Market comparisons are made with the assistance of remuneration surveys, including specific surveys 
commissioned with external consultants where appropriate, to ensure relevant benchmarking.
•
•
•
Report of the Remuneration Committee www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 34
Report of the Remuneration Committee
Components of executive remuneration (continued)
The remuneration of Executive Directors consists of a number of separate elements: base salary, a short-term incentive plan (annual  
cash bonus), long-term equity incentives, car and fuel allowance, benefits in kind (medical expenses insurance) and pension provision  
or allowance.
The emoluments of the Directors for the year ended 31 December 2006 were as follows:
     Year     Seven months
     ended     ended
     31 Dec     31 Dec
     2006     2005
 Fees Salary Bonus Benefits Total Fees Salary Bonus Benefits Total
 £000 £000 £000 £000 £000 £000 £000 £000 £000 £000
Executive Directors
Mark Harper – 420 147 21 588 – 214 85 11 310
Steve Dryden – 278
∆  88 13 379 – 132
†
 48 20 200
      
Non-executive Directors      
Jeff Harris 150 – – – 150 86 – – – 86
Paul Drechsler 40 – – – 40 23 – – – 23
Adrian Auer 40 – – – 40 23 – – – 23
Warren Knowlton
#
 19 – – – 19 – – – – –
Paul Heiden* 11 – – – 11 18 – – – 18
∆ Includes a supplementary payment of £28,430 in respect of pension provision above the relevant earnings cap
†
  Includes a supplementary payment of £14,226 in respect of pension provision above the HM Revenue & Customs earnings cap
#
  Appointed 1 June 2006
*  Resigned 26 April 2006
Annual bonuses
Under the terms of the annual bonus arrangements for 2006, Mark Harper and Steve Dryden were each potentially entitled to a maximum 
bonus of up to 100% of basic salary (50% in cash and 50% in shares in the Company, the entitlement to such shares being deferred for 
three years, in accordance with the rules of the Company’s Deferred Annual Share Bonus Plan (‘DASB’)).
For the year ended 31 December 2006, the performance targets were approved by the Remuneration Committee and based upon 
Filtrona’s adjusted earnings per share. Company performance was required to reach a minimum adjusted earnings per share target for  
a bonus of 30% of basic salary to be payable (15% in cash and 15% in deferred shares under the DASB).
For the year ended 31 December 2006, the Company’s performance exceeded the minimum target and the Remuneration Committee 
approved a bonus of 70% of basic salary for each of the Executive Directors (35% in cash and 35% in deferred shares under the DASB).
For the financial year ending 31 December 2007, the Remuneration Committee determined that for the Executive Directors the same 
maximum bonus criteria will apply. Targets have been set relating to the growth in adjusted earnings per share over the prior year. Any 
payment is entirely at the discretion of the Remuneration Committee.
Executive share-based incentive plans
The Remuneration Committee is firmly of the view that offering Executive Directors and other senior executives the opportunity to be 
awarded shares in the Company is an important part of motivating, rewarding and retaining key employees so that they may participate  
in the future growth in value of the Company. It is also of the view that the Executive Directors and other senior executives should be 
encouraged to invest directly in the Company through the purchase of shares.
The Company’s DASB and Long Term Incentive Plan (‘LTIP’) (consisting of Part A – Approved and Unapproved Executive Share Options 
and Part B – Performance and Matching Share Awards) are both intended to support these objectives. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 35
Executive share-based incentive plans (continued)
Awards under Part B are performance options exercised at nil cost by the participant.
The award of shares or options under the Executive share-based incentive plans is determined by the Remuneration Committee taking 
into account, inter alia, the role of the individual, and other such criteria as they may determine from time to time. The current policy is that 
participation in the DASB and Part B of the LTIP is restricted to Executive Directors, members of the Executive Committee and certain 
other nominated senior executives. Participation in Part A of the LTIP is extended to a wider group of employees.
The Company’s current executive share-based incentive arrangements, implemented at demerger, reflected those of Bunzl plc, the 
former parent company. In order to determine whether those plans continue to provide a proper alignment of Executive Director and 
senior executive interests, with those of shareholders, it is the intention of the Remuneration Committee that they are reviewed prior to the 
end of 2007.
The Deferred Annual Share Bonus Plan 
The DASB provides for Executive Directors and nominated senior executives to receive existing issued ordinary shares in the Company for  
nil payment. The number of shares subject to an award is determined at the time the award is granted, based upon the performance in the 
Company’s preceding financial year, of the participant and/or the Group and/or the business in which the participant works.
Under the rules of the DASB the aggregate value of shares made subject to awards granted to a participant in any one financial year may 
not exceed 100% of their basic salary as at the award date. The Remuneration Committee has determined that, in accordance with the 
Company’s bonus arrangements, awards under the DASB will not normally exceed 50%.
Shares awarded under the DASB are held in trust until 1 March in the third calendar year after the calendar year in which the award was 
made, at which point they are transferred to the participant.
The Long Term Incentive Plan – Part A
Part A of the LTIP provides for participants to receive share option awards over shares worth up to two times basic salary or £250,000 
(whichever is the greatest) in any financial year, subject to performance conditions. 
During 2006 participants received share option awards over shares worth up to 90% of basic salary, with the exercise price set equal to 
the share price at the date of grant.
A share option award will normally be exercisable between three and ten years following its grant, but only if the specified performance 
condition has been satisfied.
The performance conditions attached to Part A awards made in 2006 were based on the Company’s earnings per share growth (adjusted to 
exclude items which did not reflect the Company’s underlying financial performance and intangible amortisation) relative to inflation over three 
financial years, requiring such earnings per share growth to exceed inflation by an average of at least 3% per annum. The performance 
condition will be tested after three financial years and there will be no provision for retesting. To the extent the performance condition has not 
been met after three financial years, the relevant share option awards will lapse.
The Remuneration Committee review the performance conditions each time share options are awarded under Part A of the LTIP in order 
to ensure that they remain challenging and may impose different conditions on share options awarded in subsequent years, provided that 
any new conditions are no less challenging. 
In addition to the LTIP, the Company operates a Save As You Earn scheme (‘SAYE’). During the year the Company made its first awards 
under the rules of the SAYE. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 36 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 37 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 36
Report of the Remuneration Committee
The Long Term Incentive Plan – Part A (continued)
Details of the awards granted and outstanding during the year to executive directors under the LTIP Part A and the SAYE are as follows:
    Awarded   Exercise Earliest
 Executive Director At 1 Jan 2006 in year  At 31 Dec 2006  price vesting date  Expiry date
Mark Harper      
LTIP Part A 156,903 – 156,903 239.00p 23 June 2008 22 June 2015
LTIP Part A – 148,380 148,380 254.75p 8 Sept 2009 7 Sept 2016
SAYE 5 year plan – 6,793 6,793 237.00p 1 April 2011 30 Sept 2011
 
Steve Dryden      
LTIP Part A 96,234 – 96,234 239.00p 23 June 2008 22 June 2015
LTIP Part A – 88,321 88,321 254.75p 8 Sept 2009 7 Sept 2016
SAYE 5 year plan – 6,793 6,793 237.00p 1 April 2011 30 Sept 2011
The Long Term Incentive Plan – Part B
A performance share award under Part B of the LTIP consists of a conditional right to receive shares in the Company, subject to 
performance conditions, on the basis described below. Participants will make no payment for the grant and exercise of performance 
share awards.
Participants may receive performance share awards, excluding matching share awards, of shares worth up to two times their basic salary 
in any financial year.
 
In May 2005, following the demerger, the Executive Directors and other senior executives were granted a one-off matching share award 
linked to their investment in the Company’s shares. 
A performance share award, including any matching share award, will not normally be exercisable before the third anniversary of its award 
and may only be exercised to the extent that the applicable performance conditions have been satisfied. For employees based outside 
the US, the options remain capable of being exercised up to the sixth anniversary of grant. For employees based in the US, once the 
performance conditions have been satisfied the options must be exercised within 30 days of vesting.
In the case of the vesting of the matching share awards, granted by reference to shares purchased by participants, not only will applicable 
performance conditions have to be satisfied but those awards will only vest to the extent that participants have retained the shares 
they bought in May 2005. 
The extent to which performance share awards vest is subject to the Company’s total shareholder return (’TSR’) performance over a  
fixed three year period relative to the TSR performance of a specified group of companies. For the initial performance share awards the 
comparator group is the FTSE 250 companies (excluding investment trusts) at the start of the three year performance period. Identical 
conditions were attached to the matching share awards.
The three year performance period for the TSR usually starts at the beginning of the calendar month in which a performance share award 
is made and the relevant TSR figures are averaged over a one month period at the beginning and end of the performance period. In the 
case of the initial performance share awards, the three year performance period started on the date of the award.  www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 37 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 37
The Long Term Incentive Plan – Part B (continued)
A performance share award, including any matching share award, will vest in full only if the Company’s TSR performance is ranked at 
upper quartile or above within the peer group over the performance period. For median performance one quarter of such awards vests, 
rising proportionally up to full vesting thereafter. For below median performance, no such awards will vest. 
The performance condition will be tested after three years and there will be no provision for retesting. To the extent the performance 
condition has not been met after three years, the relevant performance or matching share awards will lapse. 
The Remuneration Committee review the performance conditions each time performance share awards are granted under Part B of the 
LTIP in order to ensure that they remain challenging and may impose different conditions on share awards granted in subsequent years 
provided that any new conditions are no less challenging. 
 
Details of the awards granted and outstanding during the year to the Executive Directors under the LTIP Part B and DASB are as follows:
        
      Awarded  Earliest
 Executive Director    At 1 Jan  2006 in year At 31 Dec 2006 vesting date Expiry date
Mark Harper      
LTIP Part B ‘Matching’  126,902 – 126,902 7 June 2008  6 June 2011
LTIP Part B ‘Performance’  161,637 141,533 303,170 7 June 2008 12 March 2012  
DASB   – 48,993 48,993 1 March 2009 1 March 2009
Steve Dryden      
LTIP Part B ‘Matching’  102,474 – 102,474 7 June 2008  6 June 2011
LTIP Part B ‘Performance’  99,137 84,246 183,383 7 June 2008  12 March 2012
DASB   – 27,503 27,503 1 March 2009 1 March 2009
A total of 2,612,304 (2005: 3,453,266) share incentive awards were granted to Executive Directors and senior executives under the LTIP 
and the DASB during the year ended 31 December 2006.
The middle market price of an ordinary share in the Company on 31 December 2006 was 261.50p. The middle market price of an 
ordinary share in the Company during the year ranged from 251.50p to 354.0p. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 38
Report of the Remuneration Committee
Performance graph
The graph below represents the comparative total shareholder return (share price and dividend) performance of the Company against the 
FTSE 250 (excluding investment trusts) Index from the date of the listing of the Company until 31 December 2006. This index has been 
selected as it is considered the most appropriate published general index in which the Company is a constituent.
Executive Directors’ service contracts
The policy for senior executive service contracts is that notice periods will normally not exceed 12 months. Both Mark Harper and  
Steve Dryden have service contracts with a notice period of 12 months from either party. The service contracts for the Executive Directors 
are available for inspection by members at each AGM and during normal business hours at the Company’s Registered Office.
The Remuneration Committee’s policy in relation to termination of service contracts is to apply an appropriate level of mitigation, having 
regard to all of the circumstances of the individual and the termination of employment, and to any legal advice received.
The Company has the right to make a payment in lieu of notice and any such payment may be made in monthly instalments at
the Company’s discretion and may be reduced to take into account any sums earned during the payment period by way of
employment elsewhere.
Non-executive Directors
The appointment of each Non-executive Director is for a fixed term of three years and is reviewed at the end of two years. The Non-
executive Directors do not have service contracts and do not participate in any Company pension, share or incentive scheme. In 
accordance with best practice, letters of appointment have been issued for all Non-executive Directors for an initial period of three 
years. These letters are available for inspection by members at each AGM and during normal business hours at the Company’s 
Registered Office.
Fees for Non-executive Directors, other than the Chairman, are approved by the Board in accordance with the policy adopted by the 
Remuneration Committee. The fees are subject to appropriate benchmarking and based on a standard fee with additional fees payable 
for the chairing of the Audit and Remuneration Committees. Fees for the Chairman are subject to appropriate benchmarking and 
approved by the Remuneration Committee.
www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 38
J J A S O N D J F M A M J J A S O N D
90
100
110
120
130
140
150
160
170
Filtrona plc 
FTSE 250 (excluding investment trusts) Index Source: Thomson Datastream
2006 2005 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 39 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 39
Pension schemes
Mark Harper is a member of the Filtrona Senior Pension Scheme (‘FSPS’) which entitles him to a pension at the date of retirement based 
on final salary. He accrues pension at the rate of 3% of final salary for each year of membership of the scheme and he contributes 9% of 
pensionable salary to the scheme. His normal retirement age is 60.
Steve Dryden is a member of the BRIS section of the Filtrona Pension Plan (‘FPP’) which entitles him to a pension at the date of retirement 
based on final salary. He accrues pension at the rate of 1.9% of final salary for each year of membership of the plan and he contributes 
7% of pensionable salary to the plan. His normal retirement age is 65. Steve’s approved pension benefits are affected by the former HM 
Revenue & Customs earnings cap, which was retained by the FPP following new pension legislation effective from April 2006. He receives 
a supplementary payment of 20% of his pensionable salary above the cap to permit him to secure additional pension benefits.
Both the FSPS and the FPP provide death benefits as shown in the table below:
 
 FSPS BRIS section of the FPP
   Death-in-service Death after  Death-in-service Death after
   before NRD* retirement  before NRD*  retirement
Lump sum  4 x annual salary Guaranteed  4 x annual salary Guaranteed
   and a refund of  pension   and a refund of  pension
   member’s (5 years)  member’s  (5 years)
   contributions   contributions
 
Spouse’s pension  Up to 60% of  Up to 60% of  Up to 50% of  Up to 50% of
   member’s member’s  member’s  member’s
   pension pension  pension  pension
   entitlement entitlement  entitlement  entitlement
   as at NRD as at NRD  as at NRD  as at NRD
Dependants’ pension  Share of Share of  Share of  Share of
   spouse’s spouse’s   spouse’s  spouse’s
   pension if pension if  pension if  pension if 
   applicable applicable  applicable  applicable
* normal retirement date www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 40
Report of the Remuneration Committee
Pension Schemes (continued)
The table below shows the accrued pension in the scheme and plan to date in respect of the Executive Directors, together with the 
transfer value of such accrued pensions:
    Total Value of Value of Value of Total
  Gross Increase in accrued net increase accrued accrued change
  increase in accrued pension at in accrual pension at pension at in value
  accrued pension net 31 Dec  during 1 Jan  31 Dec during
  pension of inflation 2006 the year 2006 2006 the year
    (i)  (ii) (ii) (iii)
 Executive Director  £000 £000 £000 £000 £000 £000 £000
Mark Harper  35 31 192 420 2,184 2,502 280
Steve Dryden  3 2 22 3 118 122 (4)
(i)  The accrued pension at 31 December 2006 is that which would be paid annually on retirement based on the assumption that service terminated at the year end
(ii)  The value of the accrued pension is calculated on a current transfer value basis and is not the actual cost of providing the pension
(iii)   The change in the value of the accrued pension during the year includes the effect of fluctuations in the transfer value due to factors beyond the control of the Company. 
It is calculated in accordance with current legislation and is after the deduction of Directors’ contributions during the year
A review was undertaken to assess the impact of the changes to UK pension legislation implemented in April 2006. There were no 
material additional costs to the Company following this review and none are anticipated.
Outside appointments
Executive Directors are permitted to accept up to two appropriate non-executive directorships offered by listed companies and other 
organisations, which provide industry experience or public service. Such outside appointments are subject to prior Board approval, taking 
into account existing duties or potential conflicts of interest. From 1 December 2006 Mark Harper was appointed a non-executive director 
of BBA Aviation plc and will retain his fees of £30,000 per annum.
Directors’ shareholdings
The interests (both beneficial and family interests) of the Directors in office at 31 December 2006 in the ordinary share capital of the 
Company were as follows: 
        At 31 Dec 2005
        or date of
   At 31 Dec 2006     appointment
Jeff Harris   21,651     11,651
Mark Harper   85,986*     75,986*
Steve Dryden   51,237
#
     51,237
#
Adrian Auer   7,500     7,500
Paul Drechsler   8,519     8,519
Warren Knowlton   7,500     7,500
* 410 shares are held non-beneficially and the balance are held beneficially in a nominee account
#
 held beneficially in a nominee account
The Executive Directors are regarded as being interested, for the purposes of the Companies Act 1985, in 872,166 (2005: 423,009) 
ordinary shares in Filtrona plc currently held by the Filtrona Employee Benefit Trust as they are, together with other Filtrona employees, 
potential beneficiaries of the Trust.
By order of the Board
Paul Drechsler
Chairman
Remuneration Committee
1 March 2007 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 41
Filtrona is committed to a high standard of corporate governance, corporate responsibility and risk management throughout the 
Company. The Board is accountable to the Company’s shareholders for good governance.
Compliance with the Combined Code
As a listed company, Filtrona is required to comply with the Combined Code on Corporate Governance issued by the Financial Reporting 
Council (‘the Code’). This Report describes how the Company applies the principles of corporate governance set out in the Code and the 
extent to which it complies with the provisions contained in Section 1 of the Code. 
The Board considers that, during the financial year ended 31 December 2006, the Company has complied with all the provisions in  
the Code, except one. The exception relates to the posting of the notice of the Company’s first AGM and related papers to shareholders  
in 2006. The Company did not post the Notice of Annual General Meeting for 2006 and related papers within the notice period of 20 
working days before the meeting, as required under the code provision D.2.4. The period of non-compliance was 6 working days and 
papers were posted 14 working days before the meeting. The delay in the posting of the Notice of Annual General Meeting and related 
papers was due to the finalisation of the design of the Company’s first Annual Report and Accounts.
Board of Directors
The Board provides leadership to the Company and has overall responsibility for the business and management of Filtrona. 
Composition
The Board currently comprises a Non-executive Chairman, two Executive Directors, and three Non-executive Directors. Five of these 
Directors served throughout the entire financial year ended 31 December 2006. Paul Heiden resigned as a Director on 26 April 2006 and 
Warren Knowlton was appointed as a Director on 1 June 2006. Biographies of the Directors, demonstrating the range of experience, skills 
and independent judgement available to the Board, appear on page 27. The Board is of the view that it has the appropriate balance of 
expertise and ability available to it.
Board roles
The roles of the Chairman and the Chief Executive are separately held and are so defined as to ensure a clear separation of 
responsibilities. The Chairman leads the Board and ensures its effectiveness, the Chief Executive is responsible for the executive 
management and performance of Filtrona’s operations.
Non-executive Directors
In the opinion of the Board, Paul Drechsler, Adrian Auer and Warren Knowlton are each considered to be independent of management 
and there are no relationships or circumstances which would materially interfere with the exercise of their independent judgement. 
The Board is content that the Non-executive Directors devote sufficient time to the business of Filtrona.
The Board considers that the Non-executive Directors provide a sound basis for good corporate governance for the Company, 
challenging management’s performance and, in conjunction with the Executive Directors, ensuring that appropriate financial controls and 
systems of risk management are maintained. 
Senior Independent Director
Paul Drechsler acts as the Senior Independent Non-executive Director. In that role he is available to shareholders to discuss and develop 
an understanding of their issues and any concerns which cannot be resolved by discussions with the Chairman, the Chief Executive or 
Finance Director or where such contact is inappropriate.
Board meetings
There were eight scheduled Board meetings during the year, including one day of strategy discussions, with two meetings being held at 
operational facilities, including an overseas location. In addition to the scheduled formal meetings, the Board met on an ad hoc basis as 
required for particular matters. The Chairman and Chief Executive maintain regular contact with the Directors and the Chairman also 
holds periodic informal meetings with the Non-executive Directors, without any of the Executive Directors being present, to review 
performance and to monitor corporate control mechanisms.
At each scheduled meeting, the Board considers a report from the Chief Executive on current trading, a financial review, and other 
significant business issues such as acquisition proposals and other major investment plans. Additionally, the Board receives presentations 
and considers reports from senior management about matters of material importance to the Company. 
Papers for each scheduled formal Board and Committee meeting are usually provided five clear working days beforehand. 
Corporate Governance Report www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 42
Corporate Governance Report
Delegation
The Board delegates specific responsibilities to the Audit, Nomination and Remuneration Committees which operate within clearly defined 
terms of reference approved by the Board. These Committees report regularly to the Board. 
The Board has adopted a schedule of matters which are required to be reviewed by it, including the approval of annual and interim results, 
strategic plans, annual budgets, material increases to borrowing and loan facilities, acquisitions and disposals and major capital and 
operating expenditure proposals.
Board procedures
The internal procedures implemented by the Company to ensure the Board maintains overall control for all material, strategic, financial, 
operational and compliance matters affecting the Company are included within the internal control section of this Report set out on  
page 44.
In furtherance of their duties, there are agreed procedures for the Directors to take independent professional advice, if necessary, at the 
Company’s expense. All Directors have access to the advice and services of the Company Secretary who is responsible to the Chairman 
for ensuring that Board procedures are complied with and that applicable rules and regulations are followed.
On appointment, Directors benefit from an induction programme tailored to their individual needs and designed to assist them in their 
understanding of Filtrona and its operations. The programme, which continues throughout a Director’s tenure as necessary, includes 
details of fiduciary duties, Companies Act requirements, dealing restrictions as outlined in the Disclosure Rules and the Model Code on 
directors’ dealings in securities contained in the Listing Rules of the Financial Services Authority, Board and business related matters, 
meetings with senior management, site visits and the opportunity to meet with major shareholders. 
Insurance 
The Company maintains directors and officers liability insurance at a level and with a scope that the Board considers appropriate.
Board Committees
Each Board Committee has established clear and defined terms of reference detailing their responsibilities and powers. The terms of 
references for each Board Committee were updated during the year and are available on Filtrona’s website at www.filtrona.com.
Audit Committee
The Audit Committee currently comprises Adrian Auer, who chairs the Committee, Paul Drechsler and Warren Knowlton. Adrian Auer has 
recent and relevant financial experience. A representative of the Company’s external auditor ordinarily attends all meetings of the Audit 
Committee and the Finance Director is normally invited to attend the meetings.
The Audit Committee met four times during the year. Its duties include monitoring the integrity of the financial statements of the Company, 
reviewing, challenging and approving Filtrona’s accounting policies and scrutinising the effectiveness of the Company’s internal control 
and risk management systems.
Additionally, the Audit Committee keeps under review the scope and results of the external audit and its cost effectiveness. The Audit 
Committee makes recommendations to the Board regarding the re-appointment or removal of the external auditor, their terms of 
engagement and the level of their remuneration.
The Audit Committee reviews the process which is in place to ensure the independence and objectivity of the external auditor.
The Company has a policy regarding the engagement of the external auditor to supply non-audit services. The policy recognises the 
importance of maintaining the objectivity and independence of the external auditor by minimising its involvement in projects of a non-audit 
nature. It is, however, also acknowledged that, due to its detailed understanding of the Company’s business, it may sometimes be 
necessary to involve the external auditor in non-audit related work, principally comprising further assurance services relating to due 
diligence and other duties carried out in respect of acquisitions and disposals and tax services. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 43
Nomination Committee
The Nomination Committee currently comprises Jeff Harris, who chairs the Committee, Paul Drechsler and Adrian Auer.
The Committee is responsible for selecting and recommending candidates for appointment as Executive and Non-executive Directors of 
the Company.
The Committee meets as required, normally at least once a year.
The Nomination Committee met three times during the year and, with the benefit of assistance from external advisers, made 
recommendations to the Board regarding director appointments.
In furtherance of these duties and when considering succession planning, the Committee looks at the balance, structure and composition 
of the Board and takes into account the future challenges and opportunities facing the Company. The selection process is, in the Board’s 
view, both rigorous and transparent in order to ensure that appointments are made on merit and against objective criteria set by the 
Committee.
Remuneration Committee
The Remuneration Committee currently comprises Paul Drechsler who chairs the Committee, Adrian Auer and Warren Knowlton.  
The composition and role of the Remuneration Committee is described more fully in the Report of the Remuneration Committee on  
pages 33 to 40.
The following were Directors of the Company and as Committee members attended the following number of meetings during the year 
ended 31 December 2006:
     Audit  Nomination  Remuneration
  Board  Committee  Committee  Committee
Held  8  4  3  4
Attended     
Jeff Harris  Chairman  8  –  3  –
Mark Harper Chief Executive  8  –  –  –
Steve Dryden Finance Director  8  –  –  –
Paul Drechsler Senior Independent   8  4  3  4
 Non-executive Director  
Adrian Auer Non-executive Director  8  4  3  4
Warren Knowlton* Non-executive Director  6  3  –  3
Paul Heiden** Non-executive Director  2  1  –  1
*  Appointed 1 June 2006
**  Resigned 26 April 2006
Performance evaluation 
During 2006 the Board carried out its first evaluation of the effectiveness of the Board and its Committees. This involved the Directors 
independently completing a questionnaire, provided by external consultants, and reviewing individual performance and the performance 
of the Board and its Committees. The results, which served to strengthen the Board’s priorities and communication, were discussed at a 
Board meeting and the various relevant Committee meetings. Following this detailed review the Directors have concluded that the 
processes in place enable the Board, and its Committees, to operate effectively.
As part of the 2006 Board performance evaluation, the Directors (led by the Senior Independent Non-executive Director) also appraised 
the Chairman’s performance without the Chairman being present. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 44
Corporate Governance Report
Directors’ re-appointments
The Articles of Association of the Company require one third of the Directors to retire from office each year and for all Directors to submit 
themselves for re-election on a date which is no more than three years from the date of their appointment or last re-appointment. The 
Directors retiring at the forthcoming AGM and submitting themselves for re-appointment are Jeff Harris and Adrian Auer. Following the 
Board performance evaluation undertaken during the financial year, the Board is satisfied that each of the Directors being put forward for 
re-election continues to be effective and that their ongoing commitment to the role is undiminished. 
Warren Knowlton was appointed subsequent to the Company’s first AGM, held in April 2006. Following his appointment to a full-time 
chief executive role in the US in December 2006, Warren is not putting himself forward for re-election. Accordingly he will retire from the 
Board with effect from the conclusion of the AGM on 30 April 2007.
Shareholder communications
The Company communicates regularly with its major institutional shareholders, and ensures that all the Directors, including the 
Non-executive Directors, have an understanding of the views and concerns of major shareholders about the Company. This is achieved 
by the Executive Directors maintaining contact from time to time with representatives of institutional shareholders to discuss matters of 
mutual interest relating to the Company and reporting back to the Board. Shareholders have the opportunity to meet any of the Directors 
of the Company should they so wish. 
Additionally, the Board uses the AGM as an occasion to communicate with all shareholders, including private investors, who are provided 
with the opportunity to question the Directors. 
At the AGM the level of proxy votes lodged on each resolution will be made available, both at the meeting and subsequently on the 
Company’s website. Each substantially separate issue is presented as a separate resolution and the Chairmen of the Audit, Nomination 
and Remuneration Committees are available to answer questions from shareholders.
The Notice of the AGM and related papers will this year have been posted to shareholders more than 20 working days before the AGM.
The interim and preliminary results of Filtrona, along with all other press releases, are posted on the Company’s website, www.filtrona.com, as 
soon as they are announced and webcasts of the presentations of the Company’s interim and preliminary results are available for download. 
Internal control
In accordance with the Code, the Board acknowledges its responsibility to ensure that an adequate system of internal controls is in place.
The Board has overall responsibility for the Company’s system of internal control and risk management and for reviewing the effectiveness 
of this system. Such a system can only be designed to manage, rather than eliminate, the risk of failure to achieve business objectives and 
can therefore only provide reasonable, and not absolute, assurance against material misstatement or loss.
Operational matters and the responsibility for the day-to-day management of the businesses are delegated to the Chief Executive 
supported by the Executive Committee and to the respective Line of Business Heads within delegated authority limits and in accordance 
with clearly defined systems of control.
The Executive Committee, which meets at least twice per month, is made up of the Chief Executive, the Finance Director, the Company 
Secretary and General Counsel and the Director of Group Human Resources. All Directors receive copies of the minutes from each 
Executive Committee meeting and the monthly reports submitted by the individual lines of business. 
The Global Executive, which consists of the Executive Committee members and the Line of Business Heads, meets periodically to 
discuss the health and safety programme, business performance and common operational issues across Filtrona’s international 
businesses.
Policies and procedures, which are subject to ongoing review and updated as required, are communicated across the Company and are 
designed to ensure significant risks, investment decisions and management issues are escalated as necessary at the earliest opportunity. 
The Board believe that this management structure ensures a strong link between Filtrona’s overall corporate strategy and its 
implementation within an effective control environment. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 45
Risk review
The Board is of the view that an ongoing process for identifying, evaluating and managing significant risks faced by the Company was in 
place throughout 2006 and up to the date of approval of the Annual Report and Accounts for 2006. This process is regularly reviewed by  
the Board with the assistance of the Audit Committee and accords with the internal control guidance for directors as required by the Code.
A Risk Management Committee, which during 2006 consisted of the Executive Committee members and the Head of Internal Audit, 
meets at least four times each year and otherwise as necessary. The Committee enhances management’s ability to review and monitor 
the effectiveness of risk control on a regular basis. The terms of reference of the Risk Management Committee include supporting 
corporate governance requirements, recommending business risk strategy and developing policies and procedures for risk management 
and internal controls. They also include the monitoring of the effectiveness of internal controls and the design of processes to test the 
effectiveness of controls.
Risk review is a continuing process embedded within the businesses with executives required to include risk management on agendas  
for their regular management meetings and to report half yearly to the Risk Management Committee on actions taken to review the 
effectiveness of their controls. Businesses are also required to have processes to formally identify risks, consider their financial and 
non-financial implications and, so far as possible, take action to reduce those risks.
The Company has an internal audit department. The resources of this department are augmented with independent expert external 
resources wherever necessary to review risk and monitor compliance with the Company’s policies and procedures across its international 
operations. Accordingly the resources of the department, together with additional available resources, are considered adequate.
The Audit Committee regularly reviews the effectiveness of internal controls based on the processes implemented by the Risk 
Management Committee. At each meeting the Audit Committee receives a presentation from the Head of Internal Audit on action taken  
to identify and reduce risks and to increase awareness of both risk management and the importance of having effective internal controls.
Financial reporting
The Directors have acknowledged, in the Statement of Directors’ Responsibilities set out on page 31 and 32, their responsibility for 
preparing the financial statements of the Company and the Group. The external auditor has included, in the Independent Auditor’s Report 
set out on page 80, a statement about their reporting responsibilities.
The Directors are also responsible for the publication of an unaudited interim report of the Company which provides a balanced and 
understandable assessment of the Group’s financial position for the first six months of each accounting period. 
Going concern
After making appropriate enquiries, the Directors consider that the Company and the Group have adequate resources to remain in 
operation for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the financial statements. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 46
Corporate Social Responsibility Report
Filtrona values
As a responsible corporate citizen, Filtrona aims to act in a socially responsible manner at all times. The Company’s organisational 
structure is highly decentralised, and as such its businesses devise procedures appropriate to and compliant with local laws, culture 
and operating conditions but within the overall context of the Company values as set out in the Chief Executive’s Review on page 6 and 
the application of the principles detailed in this Report.
Filtrona policy
The objective of Filtrona’s corporate social responsibility policy is to guide stakeholders, including employees, on the elements that drive 
the conduct of Filtrona businesses. The way Filtrona does business reflects its commitment to profitable growth, sustainable development 
and integrity. The Company’s policies continue to promote fair and ethical dealings with customers and competitors as a matter of law 
and of conscience.
Filtrona is a member of the FTSE4Good Index which is designed to measure the performance of companies striving to meet globally 
recognised corporate responsibility standards and to facilitate investment in those companies where corporate social responsibility issues 
are an influencing factor in an investor’s decision-making process. The FTSE4Good Committee annually reviews the members for 
continued compliance with the criteria as laid down by the Committee.
Ethical business practices
Filtrona’s Standards of Business Conduct Policy is applicable to all its businesses around the world. This policy details the standards 
expected by Filtrona including free and fair competition, the prohibition of bribery and political donations and provides general guidance 
on honestly and fairly dealing with suppliers, customers and local and national authorities. Filtrona is committed to working with its 
suppliers to ensure the welfare of workers and employment conditions within its supply chain meet or exceed internationally  
recognised standards. 
Employees
Filtrona recognises that its employees are the Company’s most vital resource and their importance in making the Company successful. 
Filtrona is guided by the aim of delivering a competitive and fair employment environment and to providing the opportunity for employees 
to develop and advance subject to personal performance and business objectives.
Throughout its worldwide operations, Filtrona supports human rights as set down by the UN Declaration and its applicable International 
Labour Organisation conventions. Recruitment procedures avoid the employment of under-age staff.
Filtrona is committed to offering equal opportunities to all people without discrimination as to race, sex, nationality, ethnic or national 
origin, language, age, marital status, sexual orientation, religion or disability. The Company does not tolerate harassment in the workplace 
in any form and remunerates fairly with respect to skills, performance, competitors and local market conditions.
Filtrona encourages an open and honest culture in all its dealings with employees. Channels of communication appropriate to Filtrona’s 
local businesses have been established to allow employees to voice their views and concerns and the Company briefs all employees  
and their representatives on all relevant matters on an ongoing basis. For example, the Company has a European Information and 
Consultation Forum in respect of its operations in the European Union and this forum met in the UK during 2006 to hear presentations  
on Company performance as well as to discuss progress on health & safety matters and environmental issues.
The Filtrona Whistleblowing Policy sets out guidelines under which employees can raise certain issues (regarding ethical behaviour or 
legal compliance) with their own business or directly with Filtrona plc in confidence. Under this policy employees may come forward 
without fear of their position and have the option to consult an independent external party.
As part of its commitment to training and development within its businesses, the Company operates a graduate development programme  
in Europe and North America together with a number of local internship and apprentice placements. In the course of 2006, the Company 
established a Learning Centre at its Filters facility in Jarrow, UK, under a joint funding arrangement with the Trades Union Congress. This 
facility is available to all employees and their families and since inception over 50% of the employees at the site have accessed a variety of 
courses including National Vocational Qualifications. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 47
Filtrona Health, Safety & Environment (‘HS&E’) Council
The Company has established the Filtrona HS&E Council under the chairmanship of the Director of Group Human Resources, who 
reports directly to the Chief Executive, and it includes representatives from all the operating businesses. This body is responsible for 
reviewing the HS&E performance, developing appropriate standards and procedures and overseeing the Company’s internal HS&E 
auditing process.
At the end of 2006 the Company introduced the Filtrona Group Safety Awards whereby sites can achieve gold, silver and bronze status 
on the basis of performance assessed against stringent criteria set by the Filtrona HS&E Council. In 2006, ITC Filtrona in India achieved a 
silver award. An annual assessment of sites will be conducted for future awards.
Health & safety
A key driver of Filtrona’s success has been the high degree of autonomy which has been afforded to local management, allowing them to 
serve local markets in the most appropriate manner. Within this decentralised structure the Company has established core health and 
safety policies which the businesses are required to implement. These procedures are designed to ensure compliance with applicable 
laws and regulations and, wherever possible, to employ best practice.
One of the objectives of the Company is to achieve improvements in health and safety, and ongoing initiatives are designed to monitor, 
assess and action performance. This is driven not only by Filtrona’s commitment to meeting its legal responsibilities but also by an ethical 
desire to protect all employees from dangers in the workplace.
With the introduction of a new group monitoring system the Company is better equipped than ever before to record accidents and also  
to continually review performance. This system has enabled the implementation of an extensive programme of active monitoring that 
measures how the working environments are being managed.
During 2006 comprehensive training occurred at all worldwide locations so that the collection of accurate data is embedded within  
the organisation.
The Company believes that the introduction of the new group monitoring system has led to an increased focus on health & safety 
performance and provided management with additional visibility of relevant performance statistics.
Details of the Company’s health and safety performance for 2006 can be viewed at the Company’s website www.filtrona.com.
The Company manages occupational health by identifying key risk activities, undertaking health assessments and, where appropriate, 
implementing health surveillance programmes.
Environment
Filtrona recognises the impact that its businesses have on the environment and, as a minimum standard, complies with current applicable 
legislation in the countries in which it operates. All of the Company’s European businesses comply with EU and domestic waste 
management regulations. It is Company policy that all principal manufacturing sites are ISO 14001 accredited. 
In addition, three of the Company’s businesses are accredited to the international standard for Occupational Health & Safety Management 
Systems, OHSAS 18001 (two in the US and one in India).
The group monitoring system is also being used to record raw material usage, energy usage and waste levels. All locations are actively 
improving their statistics by recycling raw materials, thus reducing waste levels which would normally go to landfill. Where raw materials 
cannot be recycled on site, alternative uses are being investigated with the aid of third parties. 
Filtrona is commited to continuous improvement in environmental performance, the prevention of pollution and to improving efficiency in 
the use of resources including energy, water, packaging and other raw materials.
At Alliance Plastics, Erie, US the injection moulding facility has reduced the costs of electrical power over the past two years while 
increasing manufacturing throughput. The reduction in costs has been driven through capital expenditure focused on new energy efficient 
equipment combined with energy cost saving initiatives. These reductions have been achieved while the cost of energy has increased. 
Also, as part of the ISO 14001 programme, waste reduction initiatives have been undertaken and the volume of raw materials entering 
landfill has reduced.
  Filtrona plc  Annual Report and Accounts 2006 48 www.filtrona.com
At Filtrona Filters, Jarrow, considerable changes were implemented during the year. Prior to 2006, all filter and board waste was going to 
landfill at considerable cost and environmental impact. Following the changes one hundred percent of all filter waste is baled and used as 
a low emissions fuel by a manufacturer of bio-diesel from cooking oil.
Filtrona Extrusion, Chicago, installed a pump station in order to more efficiently return process water to the chill water station. This station 
reduces water consumption by at least 100,000 gallons per year.
Filtrona Filters, Bangalore, was awarded during 2006 the ‘Parisara Premi’, translated as ‘Friends of Environment’. The award was granted 
on the recommendation of the State Government Pollution Control Board.
The eTree
TM
 project, encouraging shareholders to receive future communications electronically instead of in paper form, ensures that for 
each positive response a tree is donated to the Woodland Trust.
The wider community
Filtrona is committed to being a responsible corporate citizen through the support for appropriate non-political and non-sectarian projects 
across a range of organisations and charities. Regardless of regional or national boundaries the Company aims to support the creation of 
prosperous, educated, sustainable and healthy communities in the countries and cultures in which it operates. With a focus on education 
and enterprise, health and welfare and the environment, it has developed target programmes for local communities, often involving 
commercial sponsorship and significant employee engagement through direct involvement or secondment.
There is encouragement to the businesses to support local charities both with financial and non-financial donations, be they educational, 
sporting or health-related:
Financial and material assistance for the flood victims of Thailand and the earthquake victims of Indonesia
In India, the delivery of a wide range of social investment programmes focusing on basic needs including the provision of water, power 
and sanitation to nearby community facilities, local school support, an Aids awareness campaign and environmental education
In Brazil, the provision of IT equipment to a local institute for disabled children
In Venezuela, financial support to the local blood bank and a local orphanage, plus sponsorship of a local youth football team
In the US, the provision of a number of internships, sponsoring of local youth sports teams and charitable donations to a diverse range  
of both national and local organisations
In the UK, the provision of work-experience placements, the sponsorship of local school activities and charitable donations to a diverse 
range of both national and local organisations
Applying Filtrona’s principles
The business principles reported above are underpinned by a series of policies which can be viewed via the Corporate Social 
Responsibility page on the website www.filtrona.com.
The Chief Executive is the Director with primary responsibility for this area of activity, whilst business managers are responsible for 
ensuring the underlying policy commitments are applied. The Director of Group Human Resources, supported by the Company 
Secretary, is responsible for co-ordinating the operation of the policies and reporting on them to the Chief Executive.
•
•
•
•
•
•
Corporate Social Responsibility Report Filtrona plc  Annual Report and Accounts 2006 49 www.filtrona.com
Consolidated income statement
for the year ended 31 December 2006
	 	 	 	 	 	 	 2006	 2005
      Note £m £m
Revenue      1 544.2 513.7
    
Operating	 profit	 before	 intangible	 amortisation	 and	 demerger	 expense     61.6 57.8
Intangible amortisation       (0.9) (0.8)
Demerger expense       – (1.0)
Operating	 profit	      1,2 60.7 56.0
Finance income      3 8.8 5.6
Finance expense	 	 	 	 	 	 3	 (14.9)	 (11.6)
Profit	 before	 tax       54.6 50.0
Income tax expense      4 (18.6) (17.0)
Profit	 for	 the	 year	 	 	 	 	 	 	 36.0	 33.0
    
Attributable	 to:    
Equity holders of Filtrona plc       34.5 31.6
Minority interests       1.5 1.4
Profit	 for	 the	 year	 	 	 	 	 	 	 36.0	 33.0
    
Earnings	 per	 share	 attributable	 to	 equity	 holders	 of	 Filtrona	 plc:    
Basic       6 15.8p 14.4p
Diluted      6 15.6p 14.4p www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 50
Consolidated balance sheet
at 31 December 2006
	 	 	 	 	 	 	 2006	 2005
      Note £m £m
Assets    
Property, plant and equipment      7 178.4 180.5
Intangible assets      8 59.5 63.0
Deferred tax assets	 	 	 	 	 	 15	 0.3	 1.6
Total	 non-current	 assets       238.2 245.1
Inventories      9 55.7 59.8
Income tax receivable       1.8 1.6
Trade and other receivables      10 81.1 85.6
Derivative assets      14 0.2 0.1
Cash and cash equivalents      11	 20.7	 30.7
Total	 current	 assets	 	 	 	 	 	 	 159.5	 177.8
Total	 assets	 	 	 	 	 	 	 397.7	 422.9
    
Equity    
Issued capital      18 54.8 54.8
Capital redemption reserve      19 0.1 0.1
Other reserve      19 (132.8) (132.8)
Translation reserve      19 1.6 5.3
Retained earnings	 	 	 	 	 	 19	 219.0	 197.3
Attributable	 to	 equity	 holders	 of	 Filtrona	 plc       142.7 124.7
Minority	 interests	 	 	 	 	 	 19	 6.0	 5.6
Total	 equity	 	 	 	 	 	 	 148.7	 130.3
Liabilities    
Interest bearing loans and borrowings      13 117.9 145.2
Retirement benefit obligations      17 30.9 35.8
Other payables      13 – 2.1
Provisions      16 2.7 2.5
Deferred tax liabilities	 	 	 	 	 	 15	 11.6	 11.4
Total	 non-current	 liabilities       163.1 197.0
Bank overdrafts      11 1.0 5.0
Interest bearing loans and borrowings      13 0.6 0.7
Derivative liabilities      14 0.3 0.8
Income tax payable       16.0 15.2
Trade and other payables      12 65.0 68.9
Provisions	 	 	 	 	 	 16	 3.0	 5.0
Total	 current	 liabilities	 	 	 	 	 	 	 85.9	 95.6
Total	 liabilities	 	 	 	 	 	 	 249.0	 292.6
Total	 equity	 and	 liabilities	 	 	 	 	 	 	 397.7	 422.9
The financial statements on pages 49 to 79 were approved by the Board of Directors on 1 March 2007 and were signed on its behalf by:
Steve	 Dryden
Finance Director www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 51
Consolidated statement of cash flows
for the year ended 31 December 2006
	 	 	 	 	 	 	 2006	 2005
      Note	 £m £m
Operating	 activities    
Profit before tax       54.6 50.0
Adjustments for:    
 Net finance expense      	 6.1 6.0
 Intangible amortisation       0.9 0.8
 Depreciation       22.9 22.1
 Share option expense       1.2 1.1
 Other items       (0.3) 1.1
Increase in inventories       (0.3) (2.2)
Increase in trade and other receivables       (0.7) (4.7)
Increase in trade and other payables       0.1 2.1
Acquisition of employee trust shares       (1.2) (1.0)
Additional pension contributions       (1.5) (0.7)
Other cash movements	 	 	 	 	 	 	 (1.9)	 (3.9)
Cash	 inflow	 from	 operating	 activities	 	 	 	 	 	 	 79.9	 70.7
Income tax paid	 	 	 	 	 	 	 (18.8)	 (13.8)
Net	 cash	 inflow	 from	 operating	 activities	 	 	 	 	 	 	 61.1	 56.9
    
Investing	 activities	 	 	 	 Interest received       1.0 1.2
Acquisition of property, plant and equipment       (34.3) (38.2)
Proceeds from sale of property, plant and equipment       1.8 0.9
Acquisition of businesses net of cash acquired      22 (0.5) (4.6)
Proceeds from sale of business      23 0.3  –
Other investing cash flows	 	 	 	 	 	 	 (0.8)	 (0.4)
Net	 cash	 outflow	 from	 investing	 activities	 	 	 	 	 	 	 (32.5)	 (41.1)
    
Financing	 activities    
Interest paid       (7.2) (6.7)
Dividends paid to equity holders       (14.3) (4.7)
Repayments of short-term loans       (0.1) (0.6)
(Repayments of)/proceeds from long-term loans       (11.8) 133.7
Capital contribution from former parent company       – 4.2
Repayment to former parent company	 	 	 	 	 	 	 –	 (147.0)
Net	 cash	 outflow	 from	 financing	 activities	 	 	 	 	 	 	 (33.4)	 (21.1)
Net	 decrease	 in	 cash	 and	 cash	 equivalents	 	 	 	 	 	 	 (4.8)	 (5.3)
    
Net	 cash	 and	 cash	 equivalents	 at	 the	 beginning	 of	 the	 year      25.7 29.7
Net decrease in cash and cash equivalents       (4.8) (5.3)
Net effect of currency translation on cash and cash equivalents	 	 	 	 	 	 (1.2)	 1.3
Net	 cash	 and	 cash	 equivalents	 at	 the	 end	 of	 the	 year	 	 	 	 	 11	 19.7	 25.7 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 52
Consolidated statement of recognised income and expense
for the year ended 31 December 2006
	 	 	 	 	 	 	 2006	 2005
	 	 	 	 	 	 	 £m	 £m
Recognition of defined benefit pension schemes on demerger:   
 Actuarial loss       – (34.7)
 Deferred tax credit on actuarial loss       – 10.5
Other actuarial gains/(losses) on defined benefit pension schemes      2.2 (2.0)
Deferred tax (expense)/credit on other actuarial gains/(losses) on defined benefit pension schemes    (0.7) 0.7
Movement on cash flow hedge        – (0.1)
Foreign exchange translation differences:
 Attributable to equity holders of Filtrona plc       (3.7) 6.9
  Attributable to minority interests       (0.3) 0.5
Income and expense recognised directly in equity       (2.5) (18.2)
Profit for the year	 	 	 	 	 	 	 36.0	 33.0
Total	 recognised	 income	 and	 expense	 	 	 	 	 	 	 33.5	 14.8
   
Attributable	 to:   
Equity holders of Filtrona plc       32.3 12.9
Minority interests	 	 	 	 	 	 	 1.2	 1.9
Total	 recognised	 income	 and	 expense	 	 	 	 	 	 	 33.5	 14.8 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 53
a	 Basis 	 of	 preparation
The consolidated financial statements have been prepared and approved by the Directors in accordance with International Financial 
Reporting Standards as adopted by the EU in accordance with EU law (IAS Regulation EC 1606/2002) (‘adopted IFRS’). The Company 
has elected to prepare its individual company financial statements in accordance with United Kingdom Generally Accepted Accounting 
Principles (‘UK GAAP’); these are presented on pages 81 to 85.
The financial statements are prepared on a historical cost basis except for derivative financial instruments which are stated at fair value. 
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the 
period in which the estimate is revised and future periods if relevant.
The preparation of financial statements that conform with adopted IFRS requires the use of estimates and assumptions that affect the 
reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expense during 
the reporting period. Although these estimates are based on management’s best knowledge of the amount, event or actions, actual 
results may ultimately differ from those estimates.
The accounting policies used in the preparation of these financial statements are detailed below. These policies have been consistently 
applied to all periods presented.
On 6 June 2005 the Filtrona business was demerged from Bunzl plc (‘Bunzl’ or ‘former parent company’) and the ordinary shares of 
Filtrona plc (‘the Company’) were listed on the London Stock Exchange. The demerger was effected by the payment of a dividend in 
specie by Bunzl and has been accounted for as if it were a reverse acquisition. 
For the purposes of these financial statements ‘Filtrona’ or ‘the Group’ means Filtrona plc, its subsidiaries and joint ventures.
b	 Basis 	 of	 consolidation
(i)	 Subsidiaries
Subsidiaries are entities controlled by Filtrona. Control exists when Filtrona has the power, directly or indirectly, to govern the financial and 
operating policies of an entity so as to obtain economic benefit from its activities. The financial statements of subsidiaries are included in 
the financial statements from the date that control commences until the date that control ceases.
(ii)	 Joint 	 ventures
Joint ventures are accounted for using the equity method of accounting. A joint venture is an entity in which Filtrona has a long-term 
interest and exercises joint control. Under the equity method, Filtrona’s share of the aggregate assets and liabilities is included  
in the balance sheet and Filtrona’s share of operating profit, finance and income tax expense of the joint venture is included in the 
income statement.
(iii)	 Transactions 	 eliminated	 on	 consolidation
Intragroup balances and any unrealised gains and losses or income and expense arising from intragroup transactions are eliminated  
in preparing the financial statements. 
Accounting policies www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 54
Accounting policies
c	 Foreign 	 currency
(i)	 Foreign	 currency	 transactions
Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Monetary assets and liabilities 
denominated in foreign currencies at the balance sheet date are translated into sterling at the exchange rate ruling at that date and 
recognised in the income statement unless hedging criteria apply (see policy for derivative instruments).
(ii)	 Financial	 statements	 of	 foreign	 operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated at  
the exchange rate ruling at the balance sheet date. The revenues and expenses of foreign operations are translated at average exchange 
rates. 
(iii)	 Net 	 investment	 in	 foreign	 operations
Exchange differences since 1 January 2004, the date of transition to adopted IFRS, arising from the translation of the net investment  
in foreign operations, and related hedges are taken to the translation reserve and released to the income statement upon disposal. 
Differences arising prior to 1 January 2004 are included in retained earnings.
d	 Financial 	 instruments
Under IAS 39, financial instruments are measured initially at fair value. The subsequent measurement depends on the classification of the 
financial instrument. Interest bearing loans and borrowings and other financial liabilities (excluding derivatives) are held at amortised cost, 
unless they are included in a hedge accounting relationship. 
(i)	 Cash	 flow	 hedges
Where a derivative is designated as a cash flow hedge the change in fair value is recognised in equity to the extent that it is effective and 
any ineffective portion is recognised in the income statement. Where the underlying transaction results in a financial asset, accumulated 
gains and losses are recognised in the income statement in the same period as the hedged item. Where the hedged item results in a non-
financial asset the accumulated gains and losses previously recognised in equity are included in the initial carrying value of the asset. 
(ii)	 Fair	 value	 hedges
Where a derivative financial instrument is used to hedge the foreign exchange exposure of a monetary asset or liability, any gain or loss on 
the hedging instrument is recognised in the income statement. 
(iii)	 Hedges	 of	 net	 investment	 in	 foreign	 operations
The gain or loss on an instrument used to hedge a net investment in a foreign operation that is deemed effective is recognised in equity. 
Any ineffective portion is recognised in the income statement.
e	 Property, 	 plant	 and	 equipment	 Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Previously revalued properties 
were treated as being held at deemed cost upon transition to adopted IFRS.
Where parts of an item of property, plant and equipment or other assets have different useful lives, they are accounted for as separate 
items. The carrying values of property, plant and equipment and other assets are periodically reviewed for impairment when events or 
changes in circumstances indicate that the carrying values may not be recoverable. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 55
f	 Depreciation
Property, plant and equipment are depreciated over their estimated remaining useful lives on a straight line basis at the following  
annual rates: 
Freehold land Not depreciated
Buildings 2% or life of lease if shorter
Plant and machinery 7–20%
Fixtures, fittings and equipment 10–33%
The assets’ useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
g	 Leases
Where Filtrona has substantially all the risks and rewards of ownership of an asset subject to a lease, the lease is treated as a finance 
lease. All other leases are treated as operating leases and the rentals expensed to the income statement on a straight line basis.  
Lease incentives are amortised in the income statement over the life of the lease.
h	 Intangible 	 assets
(i)	 Goodwill
Goodwill is stated at cost less any impairment losses. 
Acquisitions are accounted for using the purchase method. For acquisitions that have occurred since 1 January 2004 goodwill represents 
the difference between the cost and fair value of identifiable assets acquired. For acquisitions made before 1 January 2004, goodwill  
is included on the basis of its deemed cost, which represents the amount previously recorded under UK GAAP. 
(ii)	 Research	 and	 development
Research costs are expensed to the income statement in the year in which they are incurred. 
Development costs relating to new products are capitalised if the new product is technically and commercially feasible.  
Other development costs are recognised in the income statement and expensed as incurred.
(iii)	 Customer	 relationships
Customer relationships are identified on acquisition of businesses and valued using discounted cash flows based on historical customer 
attrition rates. Amortisation is expensed in the income statement on a straight line basis over the estimated useful economic life, being  
a period of up to 25 years. 
i	 Impairment
All assets, except intangible assets, deferred tax assets and inventories, are reviewed annually to determine whether there is any indication 
of impairment. Intangible assets are tested annually. If an indication of impairment exists, the asset’s recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount, 
being the greater of value in use and net selling price, and is recognised in the income statement. Value in use is estimated based on 
future cash flows discounted using a pre-tax discount rate.
j	 Inventories
Inventories are valued at the lower of cost (on a first in, first out basis) and net realisable value. For work-in-progress and finished goods, 
cost includes an appropriate proportion of labour cost and overheads. 
k	 Cash 	 and	 cash	 equivalents
Cash and cash equivalents comprise cash balances and fixed term investments whose maturities are three months or less from the date 
of acquisition. Bank overdrafts repayable on demand which form an integral part of Filtrona’s cash management are included as part of 
cash and cash equivalents in the statement of cash flows. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 56
Accounting policies
l	 Trade 	 and	 other	 receivables
Trade and other receivables are stated at cost less impairment losses.
m	 Income 	 tax
Income tax in the income statement comprises current and deferred tax. Income tax is recognised in the income statement except to the 
extent that it relates to items recognised in equity.
Current tax is the expected tax payable on the taxable income for the year using tax rates enacted or substantively enacted at the balance 
sheet date and any adjustment to tax payable in prior years.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences arising between the tax bases  
and the carrying amounts of assets and liabilities in the financial statements. The following temporary differences are not provided for:  
goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit,  
and differences relating to investments in subsidiaries to the extent that they will not reverse in the foreseeable future. Deferred tax is 
determined using tax rates that are expected to apply when the related deferred tax asset/liability is settled.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profit will be available against which the asset 
can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
n	 Revenue
Revenue from the sale of goods is recognised in the income statement when the significant risks and rewards of ownership have been 
transferred to the buyer. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due, 
associated expenses or the possible return of goods.
o	 Finance 	 income	 and	 expense
Finance income and expense is recognised in the income statement as it accrues.
The finance expense prior to demerger includes interest payable to Bunzl. Following demerger the net reported finance expense only 
reflects the cost of external borrowing.
p	 Segment 	 reporting
A segment is a distinguishable component of Filtrona that is engaged in providing products (business segment), or in providing products 
within a particular economic environment (geographic segment), which is subject to risks and rewards that are different from those of 
other segments.
For operational and financial reporting purposes, Filtrona identifies two business segments which are characterised by shared technology 
and raw material inputs. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 57
q	 Pensions
(i)	 Defined 	 contribution	 schemes
Obligations for contributions to defined contribution pension schemes are expensed to the income statement as incurred.
(ii)	 Defined	 benefit	 schemes
The significant pension schemes in Europe and the US have been accounted for on a defined benefit basis under IAS 19 (revised): 
Employee benefits (‘IAS 19 (revised)’). Under IAS 19 (revised) Filtrona had to account for defined benefit pension charges up to the period 
of demerger on a defined contribution basis and on a defined benefit basis thereafter. Accordingly, Filtrona recognised the retirement 
benefit obligation of £34.7m at demerger in the consolidated statement of recognised income and expense.
Actuarial gains and losses that have arisen subsequently are recognised in full in the statement of recognised income and expense.
The net obligations in respect of defined benefit pension schemes are calculated separately for each scheme by estimating the amount  
of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to 
determine its present value, and the fair value of any scheme assets is deducted. The discount rate is the yield at the balance sheet date 
on AA credit-rated bonds that have maturity dates approximating to the terms of Filtrona’s obligations. The calculation is performed by a 
qualified independent actuary using the projected unit credit method.
The amounts charged to operating profit are the current service cost, past service cost and gains and losses on settlement and 
curtailments. The expected increase in the present value of scheme liabilities is included within finance expense and the expected return 
on scheme assets is included within finance income.
r	 Share-based 	 payments
Filtrona operates equity-settled, share-based incentive plans. A charge is made in the income statement based on the fair value of options 
using the Black-Scholes model with a corresponding increase in equity. The fair value is measured at grant date and spread over the 
period between grant and vesting date of the options. The amount recognised as an expense will be adjusted to reflect the actual number 
of share options that vest.
The expense for share-based payments prior to demerger was the charge allocated by Filtrona’s former parent company based on the 
participation of Filtrona employees in schemes that it operated.
The shares held in the Filtrona Employee Benefit Trust for the purpose of fulfilling obligations in respect of share option plans are treated 
as belonging to the Company and are deducted from its retained earnings.
s	 Provisions
A provision is recognised when there is a probable legal or constructive obligation as a result of a past event and a reliable estimate can 
be made of the outflow of economic resources that will be required to settle the obligation. 
t	 Net 	 debt
Net debt is defined as cash and cash equivalents, net of interest bearing loans and borrowings.
u	 Dividends
Dividends are recognised as a liability in the period in which they are declared. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 58
Notes
1.	 Segment	 analysis
Filtrona comprises the following business segments:
Plastic	 Technologies produces, sources and distributes protection and finishing products, self-adhesive tear tape and certain security 
products as well as proprietary and customised plastic extrusions and packaging items for consumer products.
Fibre	 Technologies focuses on the production and supply of special filters for cigarettes and bonded fibre products such as reservoirs 
and wicks for writing instruments and printers, household products and medical devices.
Business	 segments
	 	 	 	 	 	 	 	 2006
	 	 	 	 	 Plastic	 Fibre	 Central
	 	 	 	 	Technologies	Technologies	 Services
†
	 	 Filtrona
	 	 	 	 	 £m	 £m	 £m	 £m
Revenue	 	 	 	 	 289.5	 254.7	 –	 544.2
Operating profit/(loss) before intangible amortisation     41.4 28.1 (7.9) 61.6
Intangible amortisation     (0.8) (0.1) – (0.9)
Operating	 profit/(loss)	 	 	 	 	 	 40.6	 28.0	 (7.9)	 60.7
Segment assets     175.0 139.1 1.2 315.3
Intangible assets     56.3 3.2 – 59.5
Unallocated items       22.9 22.9
Total	 assets	 	 	 	 	 231.3	 142.3	 24.1	 397.7
Segment liabilities     35.7 29.1 6.7 71.5
Unallocated items       177.5 177.5
Total	 liabilities	 	 	 	 	 35.7	 29.1	 184.2	 249.0
Other	 segment	 items       
Capital expenditure     21.2 12.9 0.2 34.3
Depreciation     13.6 9.0 0.3 22.9
Closing number of employees     3,159 2,413 33 5,605
Average number of employees     3,055 2,385 33 5,473
†
  Central Services includes group accounts, tax, treasury, legal, internal audit, corporate development, human resources, information technology and other services provided 
centrally to support the business segments www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 59
1.	 Segment	 analysis	 (continued)
        2005
	 	 	 	 	 Plastic Fibre Central
     Technologies Technologies Services
†
  Filtrona
     £m £m £m £m
Revenue     273.3 240.4 – 513.7
Operating profit/(loss) before intangible amortisation and demerger expense    37.6 26.9 (6.7) 57.8
Intangible amortisation     (0.7) (0.1) – (0.8)
Demerger expense     – – (1.0) (1.0)
Operating profit/(loss)      36.9 26.8 (7.7) 56.0
Segment assets     180.1 143.1 4.5 327.7
Intangible assets     59.7 3.3 – 63.0
Unallocated items       32.2 32.2
Total assets     239.8 146.4 36.7 422.9
Segment liabilities     35.4 32.7 9.1 77.2
Unallocated items       215.4 215.4
Total liabilities     35.4 32.7 224.5 292.6
Other segment items       
Capital expenditure     21.6 16.4 0.2 38.2
Depreciation     13.3 8.5 0.3 22.1
Closing number of employees     2,873 2,340 33 5,246
Average number of employees     2,953 2,270 30 5,253
†
  Central Services includes group accounts, tax, treasury, legal, internal audit, corporate development, human resources, information technology and other services provided 
centrally to support the business segments
Inter-segment sales are not significant in either year. Net finance expense of £6.1m (2005: £6.0m) and income tax expense of £18.6m 
(2005: £17.0m) cannot be meaningfully allocated by segment. The majority of unallocated assets relate to cash and cash equivalents and 
the majority of unallocated liabilities relate to interest bearing loans and borrowings, retirement benefit obligations, deferred tax liabilities, 
bank overdrafts and income tax payable. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 60
Notes
1.	 Segment	 analysis	 (continued)
Geographic	 segments
	 	 	 	 	 	 	 	 2006
	 	 	 	 Revenue	 	 Segment	 Intangible	 Capital
	 	 	 	 by	 destination	 assets	 assets	 expenditure
	 	 	 	 £m	 £m	 £m	 £m
Europe     191.7 128.3 40.0 14.7
North America     219.6 115.6 19.2 11.6
Rest of World     132.9 71.4 0.3 8.0
	 	 	 	 	 	 544.2	 315.3	 59.5	 34.3
Unallocated items     – 22.9 – –
	 	 	 	 	 544.2	 338.2	 59.5	 34.3
        2005
    Revenue  Segment Intangible Capital
    by destination assets assets expenditure
    £m £m £m £m
Europe     183.7 124.5 40.7 16.7
North America     215.5 133.1 21.9 14.2
Rest of World     114.5 70.1 0.4 7.3
      513.7 327.7 63.0 38.2
Unallocated items     – 32.2 – –
     513.7 359.9 63.0 38.2
All segments are continuing operations.
2.	 Net	 operating	 expense
       2006 2005
       £m £m
Changes in inventories of finished goods and work-in-progress      0.2 (0.1)
Raw materials and consumables       250.0 232.0
Personnel expense (note 5)       129.9 124.8
Depreciation and other amounts written off property, plant and equipment     22.9 22.1
Amortisation and other amounts written off intangible assets      0.9 0.8
Demerger expense       – 1.0
Hire of plant and machinery - rentals payable under operating leases     0.6 0.5
Other operating expenses       79.0 76.6
Net	 operating	 expense        483.5 457.7 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 61
2.	 Net	 operating	 expense	 (continued)
Auditor’s	 remuneration	       2006 2005
      Note £m £m
Audit of these financial statements      i 0.2 0.2
Audit of financial statements of subsidiaries pursuant to legislation      0.6 0.6
Total audit fees       0.8 0.8
     
Other services pursuant to such legislation      ii 0.1 0.1
Other services relating to tax      iii 0.1 0.2
Services relating to corporate finance transactions entered into or proposed to be entered  
 into by or on behalf of the Company or the Group      iv 0.3 –
Total non-audit fees      v 0.5 0.3
Total fees       1.3 1.1
Notes
i Includes remuneration and expenses for the audit of the Company for the year of £4,115 (2005: £4,000)
ii   Fees for other services pursuant to such legislation related principally to the review of the interim financial statements
iii  Other services relating to tax are fees paid for tax compliance services and tax advice
iv   The Company believes that, given their detailed knowledge of Filtrona’s operations, its structure and accounting policies and the importance of carrying out detailed due diligence 
as part of the acquisition process, it is appropriate for certain audit-related work to be carried out by the Company’s auditor rather than another firm of accountants. The Audit 
Committee, which consists of independent Non-executive Directors, reviews and approves the level and nature of non-audit work which the auditor performs, including the fees 
paid for such work, thus ensuring that their objectivity and independence is not compromised
v £0.4m (2005: £0.3m) of the total non-audit fees were charged in the UK
vi Fees of £23,000 (2005: £22,000) were paid in relation to the audit of the Filtrona pension schemes
3.	 Net	 finance	 expense
       2006 2005
       £m £m
Finance	 income	 	 	 Bank deposits       1.0 1.1
Other finance income       0.1 0.1
Expected return on pension scheme assets       7.7 4.4
         8.8 5.6
   
Finance	 expense   
Loans and overdrafts       (7.4) (5.4)
Former parent company financing       – (1.7)
Other finance expense       – (0.1)
Interest on pension scheme liabilities       (7.5) (4.4)
         (14.9) (11.6)
Net	 finance	 expense       (6.1) (6.0) www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 62
Notes
4.	 Income	 tax	 expense
       2006 2005
       £m £m
Components of tax expense:   
Current tax       22.0 17.3
Prior years’ tax       (1.7) (1.2)
Double tax relief       (2.4) (0.2)
Deferred tax (note 15)       0.7 1.1
Income	 tax	 expense       18.6 17.0
Income tax expense in the UK is £2.4m (2005: £1.1m). 
Factors	 affecting	 income	 tax	 expense	 for	 the	 year
Filtrona operates across the world and is subject to income tax in many different jurisdictions. Filtrona calculates its average expected tax 
rate as a weighted average of the national corporate income tax rates in the tax jurisdictions in which it operates.
       2006 2005
       £m £m
Profit before income tax       54.6 50.0
Tax at weighted average       18.0 16.0
Effects of:       
 Permanent disallowables       0.8 0.2
 Overseas state and local tax       0.8 0.5
 Unrelieved tax losses       0.2 1.8
 Prior year adjustments       (1.7) (1.2)
 Other items       0.5 (0.3)
Income	 tax	 expense       18.6 17.0
5.	 Personnel	 expense
       2006 2005
      	 £m £m
Wages and salaries       110.2 105.2
Social security expense       13.1	 13.1
Pension expense (note 17)      	 5.4 5.4
Share option expense       1.2 1.1
       129.9 124.8
The Report of the Remuneration Committee on pages 33 to 40 sets out information on Directors’ remuneration. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 63
6.	 Earnings	 per	 share
       2006 2005
       £m £m
Earnings attributable to equity holders of Filtrona plc       34.5 31.6
Adjustment*       0.6 1.2
Adjusted earnings       35.1 32.8
   
Basic weighted average ordinary shares in issue (million)      218.8 219.1
#
Dilutive effect of employee share option plans (million)       1.8 0.8
Diluted weighted average ordinary shares (million)       220.6 219.9
Basic	 earnings	 per	 share       15.8p 14.4p
Adjustment*       0.2p 0.6p
Adjusted	 earnings	 per	 share      	 16.0p 15.0p
Diluted	 basic	 earnings	 per	 share      	 15.6p 14.4p
Adjusted earnings per share is provided to reflect the underlying earnings performance of Filtrona.
*
 The adjustment relates to intangible amortisation (2005: intangible amortisation and demerger expense) less tax relief thereon
# The number of ordinary shares issued on demerger was used as the weighted average number for the period prior to demerger
7.		 Property,	 plant	 and	 equipment
	 	 	 	 	 	 	 	 2006
	 	 	 	 	 	 	 Fixtures,
	 	 	 	 	 Land 	 and	 Plant 	 and	 fittings 	 and
	 	 	 	 	 	 buildings	 machinery 	 	 equipment	 Total
	 	 	 	 	 £m	 £m	 £m	 £m
Cost
Beginning of year     59.2 267.1 40.9 367.2
Acquisition     – 0.1 – 0.1
Divestment     – (0.7) (0.2) (0.9)
Additions     3.9 27.0 3.4 34.3
Disposals     (1.5) (4.8) (1.5)	 (7.8)
Currency translation     (3.5) (17.3) (2.1) (22.9)
End	 of	 year	 	 	 	 	 58.1	 271.4	 40.5	 370.0
Depreciation
Beginning of year     12.7 147.3 26.7 186.7
Expense in year     1.5 17.6 3.8 22.9
Divestment     – (0.7) (0.2) (0.9)
Disposals     (0.4) (4.4) (1.5) (6.3)
Currency translation     (0.8) (9.0) (1.0) (10.8)
End	 of	 year	 	 	 	 	 13.0	 150.8	 27.8	 191.6
Net	 book	 value	 at	 end	 of	 year	 	 	 	 	 45.1	 120.6	 12.7	 178.4 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 64
Notes
7.		 Property,	 plant	 and	 equipment	 (continued)
        2005
       Fixtures,
     Land and Plant and fittings and
      buildings machinery  equipment Total
     £m £m £m £m
Cost
Beginning of year     46.5 230.5 36.0 313.0
Additions     8.8 25.2 4.2 38.2
Disposals     (0.4) (5.9) (0.8) (7.1)
Currency translation     4.3 17.3 1.5 23.1
End of year     59.2 267.1 40.9 367.2
Depreciation
Beginning of year     10.8 126.6 23.1 160.5
Expense in year     1.3 17.4 3.4 22.1
Disposals     (0.2) (5.6) (0.7) (6.5)
Currency translation     0.8 8.9 0.9 10.6
End of year     12.7 147.3 26.7 186.7
Net book value at end of year     46.5 119.8 14.2 180.5
Net book value at beginning of year     35.7 103.9 12.9 152.5
8.	 Intangible	 assets
	 	 	 	 	 	 	 	 2006
	 		 	 	 	 	 	 Customer 
	 		 	 	 	 	 Goodwill	 relationships	 Total
	 		 	 	   £m	 £m	 £m
Cost
Beginning of year      54.5 21.0	 75.5
Acquisition (note 22)      – 0.6 0.6
Currency translation      (3.7) (0.2) (3.9)
End	 of	 year	 	 	 	 	 	 50.8	 21.4	 72.2
Amortisation
Beginning of year      11.2 1.3 12.5
Expense in year      – 0.9 0.9
Currency translation      (0.7) –	 (0.7 )
End	 of	 year	 	 	 	 	 	 10.5	 2.2	 12.7
Net	 book	 value	 at	 end	 of	 year	 	 	 	 	 	 	 40.3	 19.2	 59.5 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 65
8.	 Intangible	 assets	 (continued)
        2005
       Customer 
      Goodwill relationships Total
      £m £m £m
Cost
Beginning of year      46.9 21.9 68.8
Acquisitions (note 22)      5.1 – 5.1
Currency translation      2.5 (0.9) 1.6
End of year      54.5 21.0 75.5
Amortisation
Beginning of year      10.7 0.5 11.2
Expense in year      – 0.8 0.8
Currency translation      0.5 – 0.5
End of year      11.2 1.3 12.5
Net book value at end of year      43.3 19.7 63.0
Net book value at beginning of year      36.2 21.4 57.6
Filtrona tests intangible assets annually for impairment, or more frequently if there are indications that they are impaired. Intangible assets 
are allocated to cash generating units and a discounted cash flow analysis is computed to compare discounted estimated future operating 
cash flows to the net carrying value of each business, as discussed in the Business Review. The analysis is based on forecast cash flows, 
with zero growth used to determine terminal values. The estimated cash flows are discounted using Filtrona’s weighted average cost of 
capital and any impairments identified are charged to the income statement. The test is dependent on management estimates and 
judgements, in particular in relation to the forecasting of future cash flows, and the discount rate applied to these cash flows.
9.	 Inventories
      	 2006 2005
       £m £m
Raw materials and consumables       23.9 25.7
Work-in-progress       3.1 3.0
Finished goods and goods for resale       28.7 31.1
      	 55.7 59.8
Inventories held at net realisable value and amounts recognised as income from the reversal of impairments were not significant.
10.	 Trade	 and	 other	 receivables
       2006 2005
       £m £m
Trade receivables      	 68.2 71.3
Other receivables       6.6 7.1
Prepayments and accrued income      	 6.3 7.2
       81.1 85.6 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 66
Notes
11.	 Cash	 and	 cash	 equivalents
       2006 2005
       £m £m
Bank balances       18.3 29.7
Short-term bank deposits not repayable on demand       2.4 1.0
Cash	 and	 cash	 equivalents       20.7 30.7
Bank overdrafts      	 (1.0) (5.0)
Cash	 and	 cash	 equivalents	 in	 the	 statement	 of	 cash	 flows      19.7 25.7
12.	 Trade	 and	 other	 payables
       2006 2005
       £m £m
Trade payables       38.1 39.5
Other tax and social security contributions       3.2 2.8
Other payables       6.7 7.2
Accruals and deferred income      	 17.0 19.4
      	 65.0 68.9
13.	 Interest	 bearing	 loans	 and	 borrowings
	 	 	 	 	 	 	 2006 2005
       £m £m
Non-current	 liabilities
Unsecured bank loans       117.9 145.2
Current	 liabilities
Unsecured bank loans       0.1 0.1
Unsecured non-bank loan       0.5 0.6
      	 0.6 0.7
Terms	 and	 debt	 repayment	 schedule
    2006    2005
  
 <	 1	 yr	 1–2 	 yrs	 2–5 	 yrs	 Total < 1 yr 1–2 yrs 2–5 yrs Total
 £m	 £m	 £m	 £m £m £m £m £m
Unsecured bank loans 0.1 0.1 117.8 118.0 0.1 0.1 145.1 145.3
Unsecured non-bank loan 0.5 – – 0.5 0.6 – – 0.6
 0.6	 0.1	 117.8	 118.5 0.7 0.1 145.1 145.9
All debt due for repayment in two to five years must be repaid no later than May 2010. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 67
13.	 Interest	 bearing	 loans	 and	 borrowings (continued)
At 31 December 2006, the majority of Filtrona’s interest bearing loans and borrowings were at floating rates of interest set with  
reference to LIBOR for periods ranging from seven days to three months. €30m and up to US$65m of net debt was protected from 
adverse movements in interest rates with interest rate caps for a period of 20 months. On 24 February 2006 the interest rate on US$40m 
of net debt was effectively fixed at 5.1775% with an interest rate swap for a period of two years. With effect from 24 November 2006 the 
interest rate on a further US$30m of net debt was effectively fixed at 5.4313% with an interest rate swap for a period of two years. 
At 31 December 2005, the majority of Filtrona’s interest bearing loans and borrowings were at floating rates of interest set with reference 
to LIBOR for periods ranging from seven days to three months.
After taking into account foreign exchange swaps, the currency and interest rate profile of Filtrona’s financial assets and liabilities is as 
follows:
   	 2006    2005
  
 	 	 	 Impact	   Impact
   Non- of	 foreign	  Non- of foreign
 Fixed Floating	 	 interest	 exchange  Floating interest exchange
 rate rate	 bearing	 swaps	 Total rate bearing swaps Total
 £m £m	 £m	 £m	 £m £m £m £m £m
Assets
Sterling  – 3.4 11.0 –	 14.4 3.5 22.3 – 25.8
US dollar – 5.0 29.8 –	 34.8 4.9 30.2 – 35.1
Euro – 4.3 20.7 –	 25.0 7.5 11.7 – 19.2
Other – 8.0 21.4 –	 29.4 14.8 23.1 – 37.9
 –	 20.7	 82.9	 –	 103.6 30.7 87.3 – 118.0
Liabilities
Sterling – 31.1 18.9 (61.3)	 (11.3) 37.9 27.4 (78.1) (12.8)
US dollar 35.7 52.5 35.2 9.5	 132.9 111.7 35.7 20.2 167.6
Euro – 0.2 16.5 52.1	 68.8 0.3 9.1 58.6 68.0
Other – – 10.4 –	 10.4 1.0 14.1 – 15.1
 35.7	 83.8	 81.0	 0.3	 200.8 150.9 86.3 0.7 237.9
£nil (2005: £2.1m) of Filtrona’s non-interest bearing financial liabilities are due for payment in one to two years.
Filtrona’s available undrawn committed facilities at 31 December were:
      	 2006 2005
      	 £m £m
Expiring within one year       – –
Expiring after one but within two years       – –
Expiring after two years       97.2 70.0
      	 97.2 70.0
Any loans drawn on these facilities would bear interest at floating rates with reference to LIBOR for the period of the loan. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 68
Notes
14.	 Derivative	 instruments
Filtrona uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operational, 
financing and investment activities. In accordance with its treasury policy, Filtrona does not hold or issue derivative financial instruments 
for trading purposes. 
	 	 	 	 	 	 Assets	 	 Liabilities
	 	 	 	 	 	 	 	 Contractual	 	 Contractual
	 	 	 	 	 Fair 	 	 or 	 notional	 Fair	 or 	 notional
	 	 	 	 	 values	 amounts	 values 	 	 amounts
	 	 	 	 	 £m	 £m 	 	 £m	 £m
At	 31	 December	 2006
Fair value hedges
Forward foreign exchange contracts     – 1.6 – 9.7
Cash flow hedges
Forward foreign exchange contracts     – 1.8 – 2.5
Interest rate swaps     0.2 35.9 – –
Hedges of net investments
Cross currency swaps     – 4.4 (0.3) 57.2
     0.2	 43.7	 (0.3)	 69.4
      Assets  Liabilities
  
      Contractual  Contractual
     Fair  or notional Fair or notional
     values amounts values  amounts
     £m £m  £m £m
At 31 December 2005     
Fair value hedges     
Forward foreign exchange contracts     0.1 4.9 (0.1) 9.6
Cash flow hedges
Forward foreign exchange contracts     – 0.8 – 0.8
Hedges of net investments     
Cross currency swaps     – 14.6 (0.7) 64.2
     0.1 20.3 (0.8) 74.6
Fair values of forward foreign exchange contracts and cross currency swaps have been calculated at year end exchange rates compared 
to contracted rates. Fair values of interest rate swaps have been calculated by discounting cash flows at the rates of interest prevailing at 
the year end. Fair values of other financial assets and liabilities are not significantly different from their carrying amounts in 2006 and 2005. 
The net fair value gains on open forward foreign exchange contracts that hedge foreign currency risk of anticipated future sales  
and purchases will be transferred to the income statement when the forecast sales and purchases occur over the next 12 months.  
With the exception of the interest rate swaps discussed in note 13 all other derivative instruments mature within the next 12 months.
Filtrona has US dollar denominated borrowings and US dollar and euro currency swaps which it has designated as hedges of its net 
investments in subsidiary undertakings. The exchange gains of £15.5m (2005: losses of £11.3m) on these borrowings and the gains of 
£2.1m (2005: losses of £0.1m) on the US dollar currency swaps and gains of £0.8m (2005: gains of £0.3m) on euro currency swaps have 
been recognised in reserves. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 69
15.	 	 Deferred 	 tax
Deferred tax assets and liabilities are attributable to the following:
     2006   2005
  
  	 Assets	 Liabilities	 Net Assets Liabilities Net
   £m	 £m	 £m £m £m £m
Property, plant and equipment  	 (0.6) 17.8	 17.2 (0.7) 13.2 12.5
Intangible assets   – 7.2	 7.2 – 5.1 5.1
Employee benefits  	 (10.0) –	 (10.0) (11.4) – (11.4)
Other   (3.8) 0.7	 (3.1) (4.6) 8.2 3.6
Tax	 (assets)/liabilities   (14.4)	 25.7	 11.3 (16.7) 26.5 9.8
Set off of tax  	 14.1 (14.1)	 – 15.1 (15.1) –
Net	 tax	 (assets)/liabilities   (0.3)	 11.6	 11.3 (1.6) 11.4 9.8
Movements in temporary differences in the year:
       2006 2005
      	 £m £m
Beginning of year       9.8 18.4
Charge to the income statement in respect of current year (note 4)     0.7 1.1
Charge to the income statement in respect of prior years      0.9 1.7
Recognition of defined benefit pension schemes on demerger      – (10.5)
Charge/(credit) to reserves on movements of defined benefit pension schemes    0.7 (0.3)
Currency translation       (0.8) (0.6)
End	 of	 year       11.3 9.8
 
No deferred tax liability is provided in respect of any future remittance of earnings of foreign subsidiaries where Filtrona is able to control 
the remittance of earnings and it is probable that such earnings will not be remitted in the forseeable future. A deferred tax asset of £0.7m 
(2005: £0.7m) has not been recognised in respect of capital losses as the realisation of this deferred tax asset is not considered probable. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 70
Notes
16.	 Provisions
       2006 2005
       £m £m
Movements
Beginning of year      	 7.5 5.6
Expensed in the income statement      	 – 2.5
Acquisition       0.3 –
Reclassified from other payables       – 3.1
Utilised      	 (2.0) (3.8)
Currency translation      	 (0.1) 0.1
End	 of	 year       5.7 7.5
Non-current       2.7 2.5
Current       3.0 5.0
       5.7 7.5
Provisions relate primarily to vacant properties, employees’ compensation claims, legal claims and environmental clean up expenses. 
Non-current provisions are generally long-term in nature with the timing of utilisation uncertain.
17.	 Employee	 benefits
Post-retirement	 benefits
For the period prior to demerger Filtrona employees were members of the former parent company’s defined benefit and defined 
contribution pension schemes. The liabilities and assets of these schemes were transferred to successor Filtrona schemes following 
demerger. Liabilities were actuarially allocated between Filtrona and the former parent company and scheme assets were split in the 
same proportion as liabilities.
 
Under IAS 19 (revised) Filtrona had to account for defined benefit pension costs up to the period of demerger on a defined contribution 
basis and on a defined benefit basis thereafter. Accordingly, Filtrona recognised the retirement benefit obligation of £34.7m at demerger  
in the consolidated statement of recognised income and expense.
Trustees administer the schemes and the assets are held independently from Filtrona.
Pension costs of the defined benefit schemes are assessed in accordance with the advice of independent professionally qualified 
actuaries. Full triennial actuarial valuations were carried out on the principal European defined benefit schemes as at 5 April 2006 and 
annual actuarial valuations are performed on the principal US defined benefit schemes. The assets and liabilities of the defined benefit 
schemes have been updated to the balance sheet date from the most recent actuarial valuations taking account of the investment returns 
achieved by the schemes and the level of contributions.
Contributions to all schemes are determined in line with actuarial advice, local conditions and practices. Defined benefit contributions in 
2007 are expected to be £5.9m, which consists of payments to fund future service accruals and contributions to amortise the deficit in 
respect of past service. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 71
17.	 	 Employee 	 benefits (continued)
The amounts included in the consolidated financial statements in respect of arrangements in Europe and the US are as follows:
      	 2006 2005
      	 £m £m
Amounts	 charged	 to	 operating	 profit   
Defined contribution schemes       2.2 3.6
Defined benefit schemes:   
 Service cost      	 3.2 1.8
Total	 operating	 expense	 (note	 5)	 	 	 	 	 	 	 5.4	 5.4
   
Amounts	 included	 as	 finance	 (income)/expense	  
Expected return on scheme assets       (7.7) (4.4)
Interest on scheme liabilities      	 7.5 4.4
Net	 financial	 return	 	 	 	 	 	 	 (0.2) –
   
Amounts	 recognised	 in	 the	 statement	 of	 recognised	 income	 and	 expense   
Recognition of actuarial losses on demerger       – (34.7)
Actual return less expected return on scheme assets       5.5 5.7
Impact of changes in assumptions relating to the present value of scheme liabilities    (3.3) (7.7)
Actuarial gain/(loss)       2.2 (36.7)
The principal assumptions used by the independent qualified actuaries for the purposes of IAS 19 (revised) were:
     	 2006  2005
  
     Europe	 US Europe US
Rate of increase in salaries     3.90%	 4.00% 3.75% 3.00%
Rate of increase in pensions     2.90%	 n/a* 2.75% n/a*
Discount rate    	 5.00%	 5.75% 4.75% 5.50%
Inflation rate    	 2.90%	 n/a* 2.75% n/a*
Expected return on scheme assets     6.10%	 8.30% 5.90% 8.30%
*not applicable
The assumptions used by the actuaries are the estimates chosen from a range of possible actuarial assumptions which, due to the 
timescale covered, may not be borne out in practice. 
The life expectancy assumptions used to estimate defined benefit obligations at 31 December 2006 are:
 
        2006
  
       Europe	 US
Male retiring today at age 65      	 21.8	 18.1
Female retiring today at age 65        24.7	 20.4
Male retiring in 20 years at age 65       23.0	 18.1
Female retiring in 20 years at age 65       25.8	 20.4
  www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 72
Notes
17.	 Employee	 benefits	 (continued)
The fair value of scheme assets, which are not intended to be realised in the short-term and may be subject to significant change before 
they are realised, and the present value of the scheme liabilities, which are derived from cash flow projections over long periods and are 
therefore inherently uncertain, are: 
	 	 	 	 	 	 	 	 2006
	 	 	 	 Long-term 	 	 	 Long-term
	 	 	 	 rate 	 of	 Europe	 rate 	 of	 	 US	 Total
	 	 	 	 return	 £m	 return	 £m	 £m
Equities    6.90% 73.2 9.75% 17.5	 90.7
Bonds    4.70% 13.3 5.75% 10.4 23.7
Gilts    3.90% 19.9  – 19.9
Other    4.70% 0.3 4.50% 0.2 0.5
Fair value of scheme assets     106.7  28.1 134.8
Present value of scheme liabilities     (131.6)  (34.1) (165.7)
Retirement	 benefit	 obligations	 	 	 	 	 (24.9)	 	 (6.0)	 (30.9)
        2005
    Long-term   Long-term
    rate of Europe rate of  US Total
    return £m return £m £m
Equities    6.80% 64.7 9.75% 18.8 83.5
Bonds    4.45% 12.5 5.75% 10.2 22.7
Gilts    3.80% 18.1  – 18.1
Other     – 4.50% 0.1 0.1
Fair value of scheme assets     95.3  29.1 124.4
Present value of scheme liabilities     (123.3)  (36.9) (160.2)
Retirement benefit obligations     (28.0)  (7.8) (35.8)
Movement	 in	 fair	 value	 of	 scheme	 assets/(liabilities)	 during	 the	 year
     2006   2005
  
  	 Scheme 	 	 Scheme	 Scheme Scheme
  	 assets	 liabilities	 Total assets liabilities Total
  	 £m	 £m	 £m £m £m £m
Beginning of year   124.4 (160.2)	 (35.8) – – –
Recognition of defined benefit pension schemes on demerger 	 – –	 – 116.2 (150.9) (34.7)
Contribution to defined benefit pension schemes by former  
 parent company   – –	 – 1.4 – 1.4
Service cost   – (3.2)	 (3.2)	 – (1.8) (1.8)
Employer contributions   4.7 –	 4.7 2.5 – 2.5
Employee contributions   0.8 (0.8)	 – 0.7 (0.7) –
Actuarial gains/(losses)  	 5.5 (3.3)	 2.2	 5.7 (7.7) (2.0)
Finance income/(expense)   7.7 (7.5)	 0.2 4.4 (4.4) –
Benefits paid  	 (4.7) 4.7	 – (1.7) 1.7 –
Curtailment  	 – –	 –	 (7.3) 7.5 0.2
Changes in scheme coverage   – –	 – 0.3 (1.1) (0.8)
Currency translation   (3.6) 4.6	 1.0 2.2 (2.8) (0.6)
End	 of	 year   134.8	 (165.7)	 (30.9) 124.4 (160.2) (35.8) www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 73
17.	 	 Employee 	 benefits (continued)
      2006  2005
  
     %	 of	  % of 
    	 scheme  scheme
    	 assets/  assets/
    	 liabilities	 £m liabilities £m
Experience	 gains	 and	 losses
Difference between actual and expected return on scheme assets   4.1	 5.5 4.6 5.7
Net actuarial gains/(losses) recognised in the statement of recognised income and expense 1.3	 2.2 (1.2) (2.0)
Sensitivity
For the significant assumptions used in determining post-retirement costs and liabilities, the following sensitivity analysis gives the 
estimate of the impact on the income statement and balance sheet for the year ended 31 December 2006.
	 	 	 	 Scheme 	 liabilities	 	 Annual 	 service	 cost
  
   Europe US Total Europe US Total
   £m £m £m £m £m £m
0.5% decrease in the discount rate   15.0 2.6 17.6 0.4 0.1 0.5
1.0% increase in the rate of inflation   25.0 – 25.0 0.9 – 0.9
1 year increase in life expectancy   3.5 1.1 4.6 0.1 – 0.1
0.5% increase in the discount rate   (13.0) (2.2) (15.2) (0.4) (0.1) (0.5)
1.0% decrease in the rate of inflation   (20.0) – (20.0) (0.8) – (0.8)
Share-based	 incentives
Filtrona operates share-based incentive plans for its Executive Directors and employees. The total charge in respect of these plans during 
the year was £1.2m (2005: £1.1m). Details of these plans are set out below:
Share	 options	 outstanding
        2006
 
  Weighted  Weighted  Weighted  Weighted	 	 Weighted
   average Granted  average Lapsed average Exercised average	 	 average 	 	 Exercisable
 At 1 Jan exercise  during exercise during exercise during exercise	 At 	 31	 Dec	 exercise	 at 	 31	 Dec
 2006 price the year price the year price the year price	 2006	 price	 2006
LTIP Part A 2,133,262 239.5p 1,987,174 257.0p (138,812) 239.5p – –	 3,981,624	 248.2p	 –
LTIP Part B 
 ‘Matching’ 600,666 – – – – – – –	 600,666	 –	 –
LTIP Part B  
 ‘Performance’ 515,347 – 496,810 – – – – –	 1,012,157	 –	 –
DASB – – 128,320 – – – – –	 128,320	 –	 –
SAYE 3 year plan – – 764,823 237.0p (93,122) 237.0p (843) 237.0p	 670,858	 237.0p	 –
SAYE 5 year plan – – 710,677 237.0p (46,191) 237.0p – –	 664,486	 237.0p	 –
	 3,249,275	 	 4,087,804	 	 (278,125)	 	 (843) 	 7,058,111	 	 – www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 74
17.	 	 Employee 	 benefits (continued)
        2005
 
   Weighted  Weighted  Weighted
     Granted average Lapsed average  average  Exercisable
   At 1 Jan  during exercise during exercise At 31 Dec exercise at 31 Dec
   2005 the year price the year price 2005 price 2005
LTIP Part A – 2,281,608 239.5p (148,346) 239.0p 2,133,262 239.5p –
LTIP Part B ‘Matching’ – 600,666 – – – 600,666 – –
LTIP Part B ‘Performance’ – 570,992 – (55,645) – 515,347 – –
   – 3,453,266  (203,991)  3,249,275  –
Fair	 value	 model	 inputs	 for	 share	 options	 outstanding
	 	 	 	 	 	 	 	 2006
	 	 	 	 	 	 LTIP	 LTIP	 	 SAYE	 SAYE
	 	 	 	 LTIP	 	 Part 	 B	 Part 	 B	 	 3 	 year	 5 	 year
	 	 	 	 Part 	 A	 	 ‘Matching’	‘Performance’	 DASB	 plan	 plan
Weighted average fair value at grant   41.1p 211.9p 237.1p 276.4p 77.6p 92.2p
Weighted average share price at grant   248.2p 232.0p 262.1p 296.8p 296.3p 296.3p
Weighted average exercise price   248.2p – – – 237.0p 237.0p
Weighted average volatility   22.7% 23.6% 24.1% 20.5% 20.3% 24.2%
Weighted average dividend yield   2.87% 3.07% 2.75% 2.40% 2.40% 2.40%
Weighted risk free rate   4.36% 4.10% 4.23% 4.35% 4.39% 4.36%
Expected employee retention rates   76.9% 85.0% 91.5% 98.0% 55.0% 55.0%
Expected term   3.25 years 3.00 years 3.75 years 3.00 years 3.00 years 5.00 years
        2005
  
       LTIP LTIP
      LTIP Part B Part B
       Part A ‘Matching’ ‘Performance’
Weighted average fair value at grant      40.6p 211.9p 207.2p
Weighted average share price at grant      239.5p 232.0p 232.0p
Weighted average exercise price      239.5p – –
Weighted average volatility      24.0% 23.6% 23.8%
Weighted average dividend yield      2.98% 3.07% 3.07%
Weighted risk free rate      4.12% 4.10% 4.15%
Expected employee retention rates      73.7% 85.0% 85.0%
Expected term      3.25 years 3.00 years 3.75 years
All options have been valued using the Black-Scholes model.
Volatility has been calculated over the length of the expected term, for the period immediately before the grant date. The volatility of the 
former parent company’s shares has been used as a proxy for Filtrona plc’s share price volatility in the period prior to demerger.
 
Notes www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 75
17.	 	 Employee 	 benefits (continued)
	 	 	 	 	 	 	 	 2006
	 	 	 	 	 LTIP	 LTIP	 	 SAYE	 SAYE
	 	 	 LTIP	 Part 	 B	 Part 	 B	 	 3 	 year	 5 	 year
	 	 	 	 Part	 A	 ‘Matching’	 ‘Performance’	 DASB	 plan	 plan
Contractual life   3–10 years 3–6 years 3–6 years 3 years 3 years 5 years
        2005
  
       LTIP LTIP
      LTIP Part B  Part B
      Part A ‘Matching’ ‘Performance’
Contractual life      3–10 years 3–6 years 3–6 years
Details of the vesting conditions of the LTIP Part A, LTIP Part B ‘Matching’, LTIP Part B ‘Performance’ and DASB share option schemes 
are set out in the Report of the Remuneration Committee on pages 33 to 40.
All options are settled with equity.
18.	 Share	 capital
        2006 2005
        £m £m
Authorised: 500 million (2005: 500 million) ordinary shares of 25p (2005: 25p) each   125.0 125.0
Issued	 and	 fully	 paid	 ordinary	 shares	 of	 25p	 (2005:	 25p)	 each     54.8 54.8
Number	 of	 shares	 in	 issue
Beginning and end of year     	 219,326,795 219,326,795
On 8 June 2005 a resolution was passed reducing the ordinary share capital by 100p per share (total: £219.3m), and on 9 June 2005 this 
was confirmed by an Order of the High Court. The amounts arising were used to create retained earnings in the Company. 
19.	 Movements	 on	 reserves
	 	 	 	 	 	 	 	 2006
	 	 	 	 Capital	 	 	 	 	 	 redemption	 Other	 Translation	 Retained	 Minority
	 	 	 	 reserve	 reserve	 reserve	 earnings	 interests	 Total
	 	 	 £m	 £m	 £m	 £m	 £m	 £m
At	 1	 January	 2006	 	 	 0.1	 (132.8)	 5.3	 197.3	 5.6	 75.5
Total recognised income and expense for the year     (3.7) 36.0 1.2 33.5
Acquisition of employee trust shares      (1.2)  (1.2)
Share option expense      1.2  1.2
Dividends paid      (14.3) (0.8) (15.1)
At	 31	 December	 2006	 	 	 0.1	 (132.8)	 1.6	 219.0	 6.0	 93.9 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 76
19.	 Movements	 on	 reserves	 (continued)
        2005
 
  Capital  Cash flow 
  redemption Other hedging Translation Retained Minority
  reserve reserve reserve reserve earnings interests Total
  £m £m £m £m £m £m £m
At 1 January 2005  – (132.8) – (1.6) (28.7) 3.9 (159.2)
Adoption of IAS 32 and IAS 39    0.1    0.1
At 1 January 2005 restated  – (132.8) 0.1 (1.6) (28.7) 3.9 (159.1)
Total recognised income and expense for the year    (0.1) 6.9 6.1 1.9 14.8
Transfer to retained earnings on reduction in share capital     219.3  219.3
Acquisition of employee trust shares      (1.0)  (1.0)
Share option expense      1.1  1.1
Dividends paid      (4.7) (0.4) (5.1)
Arising on acquisition       0.2 0.2
Redemption of £1 preference shares  0.1      0.1
Former parent company’s capital contribution      4.2  4.2
Former parent company’s contribution to the defined  
 benefit pension scheme net of deferred tax      1.0  1.0
At 31 December 2005  0.1 (132.8) – 5.3 197.3 5.6 75.5
Employee trust shares are ordinary shares of the Company held in an employee benefit trust. The purpose of this trust is to hold shares in 
the Company for subsequent transfer to Executive Directors and employees relating to options granted and awards made in respect of 
market purchase shares under the Company’s share-based incentive plans. Full details are set out in the Report of the Remuneration 
Committee on pages 33 to 40. The assets, liabilities and expenditure of the trust have been incorporated in these financial statements. At 
31 December 2006, the trust held 872,166 (2005: 423,009) shares, upon which dividends have been waived, with an aggregate nominal 
value of £0.2m (2005: £0.1m) and market value of £2.3m (2005: £1.2m).
The other reserve relates to the Group reorganisation which took place as part of the demerger and represents the difference between 
Filtrona plc’s share capital and Filtrona International Ltd’s share capital and share premium on 6 June 2005 and is not distributable.
20.	 Analysis	 of	 net	 debt
     1 Jan  Exchange 31	 Dec
     2006 Cash flow movements 2006
     £m £m £m £m
Cash at bank and in hand      22.6 (5.8) (1.0) 15.8
Short-term bank deposits repayable on demand     7.1 (4.3) (0.3) 2.5
Short-term bank deposits not repayable on demand      1.0 1.4 – 2.4
Cash	 and	 cash	 equivalents     30.7 (8.7) (1.3) 20.7
Overdrafts     (5.0) 3.9 0.1	 (1.0)
Cash	 and	 cash	 equivalents	 in	 the	 statement	 of	 cash	 flows    25.7 (4.8) (1.2) 19.7
Debt due within one year     (0.7) 0.1 – (0.6)
Debt due after one year     (145.2) 11.8 15.5 (117.9)
Net	 debt     (120.2) 7.1 14.3 (98.8)
Notes www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 77
21.	 Operating	 lease	 commitments
At 31 December Filtrona had the following commitments under non-cancellable operating leases: 
      	 2006 2005
       £m £m
Payable within one year        1.6 1.4
Payable between one and five years        4.5 4.4
Payable after five years       4.4 4.4
       10.5	 10.2
22.	 Acquisitions
In May 2006 Filtrona purchased certain assets and the business of the CSL Digital Print division of CORGI Services Limited and, 
concurrently, entered into a five year agreement with CORGI Group Limited for the exclusive supply of registered gas installer 
identity cards.
In December 2005 Filtrona purchased an additional 30% of FractureCode Corporation ApS (‘FractureCode’), taking Filtrona’s share in 
FractureCode to 80%. FractureCode was previously accounted for as a joint venture using equity accounting. Following the purchase it is 
now fully consolidated and contributed £nil to operating profit before intangible amortisation in 2005.
The remaining 20% of shares in FractureCode could be acquired between March 2009 and December 2012. The consideration for the 
remaining 20% of shares is dependent on various profit related targets with a minimum consideration payable of €3.1m and a maximum 
of €40m. 
On acquisition the assets and liabilities of the businesses acquired were adjusted to reflect their fair values to Filtrona. The fair value 
adjustments are provisional and subject to finalisation for up to one year from the date of acquisition.
The principal fair value adjustments are as follows:
In 2006:
There were no adjustments to the book value of assets and liabilities acquired.
In 2005:
The adjustment to intangibles represents the write-off of goodwill in the entity on acquisition in accordance with IAS 38: Intangible Assets.
The adjustment to investment in associate and minority interest reflects the change from equity accounting to full consolidation.
A summary of the acquisition of CSL Digital Print in 2006 is detailed below:
	 	 	 	 	 	 	 	 Book 	 and	 	 	 	 	 	 	 	 	 fair 	 value	 	 	 	 	 	 	 	 	 of 	 assets	 	 	 	 	 	 	 	 	 acquired
	 	 	 	 	 	 	 	 £m
Property, plant and equipment        0.1
Trade and other receivables        0.1
Provisions        (0.3)
         (0.1)
Customer relationships        0.6
Consideration,	 satisfied	 in	 cash	 	 	 	 	 	 	 	 0.5 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 78
22.	 Acquisitions	 (continued)
A summary of the effect of the acquisition of FractureCode in 2005 is detailed below:
       Consistency
       of Fair value
      Book value accounting of assets
      at acquisition policy acquired
      £m £m £m
Intangible assets      0.5 (0.5) –
Trade and other receivables      0.7 – 0.7
Trade and other payables      (0.4) – (0.4)
Cash and cash equivalents      0.1 – 0.1
Investment in associate      – (0.5) (0.5)
Minority interest      – (0.2) (0.2)
       0.9 (1.2) (0.3)
Goodwill        5.1
Consideration        4.8
Satisfied by:
Accrued expenses        0.1
Cash consideration        4.7
The net cash outflow in the period in respect of the acquisition of FractureCode comprised:   
Cash consideration        4.7
Cash and cash equivalents acquired        (0.1)
Net cash outflow in respect of acquisition of FractureCode       4.6
23.	 Disposals
In March 2006 Filtrona completed the sale of the High Profile business for £0.3m, which was satisfied in cash, and the control of the 
business passed to the acquirer.
This disposal had the following effect on Filtrona’s assets and liabilities:
	 	 	 	 	 	 	 	 £m
Inventories        0.3
Trade and other receivables        0.1
Trade and other payables        (0.1)
Net identifiable assets and liabilities (at date of completion)       0.3
Consideration,	 satisfied	 in	 cash	 	 	 	 	 	 	 	 0.3
Notes www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 79
24.	 Dividends
	 	 	 	 	 	 Per 	 share	 	 Total
  
    	 2006 2005 2006 2005
     p p £m £m
2005 interim: paid 31 October 2005      2.13  4.7
2005 final: paid 28 April 2006      4.27  9.3
2006 interim: paid 27 October 2006     2.30  5.0 
2006 proposed final: payable 4 May 2007     4.60 	 10.1 
    	 6.90 6.40 15.1 14.0
25.	 Transactions	 with	 related	 parties
Other than the acquisition of FractureCode in 2005, Filtrona has not entered into any material transactions with related parties. 
Furthermore, throughout 2006 and 2005, no Director had a personal interest in any significant transaction of Filtrona.
  www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 80
We have audited the Group financial statements of Filtrona plc for the year ended 31 December 2006 which comprise the Group income 
statement, the Group balance sheet, the Group statement of cash flows, the Group statement of recognised income and expense and 
the related notes. These Group financial statements have been prepared under the accounting policies set out therein.
We have reported separately on the parent company financial statements of Filtrona plc for the year ended 31 December 2006 and on the 
information in the Report of the Remuneration Committee 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 (‘IFRS’) as adopted by the EU are set out in the Statement of Directors’ Responsibilities on page 31 
and 32.
Our responsibility is to audit the Group financial statements 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 Group financial statements give a true and fair view and whether the Group financial 
statements have been properly prepared in accordance with the Companies Act 1985 and 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 Group financial statements. The 
information given in the Directors’ Report includes that specific information presented in the Business Review that is cross referred from 
the Business Review section of the Directors’ Report. In addition we report to you if, in our opinion, 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 Group financial 
statements. We consider the implications for our Report if we become aware of any apparent misstatements or material inconsistencies 
with the Group 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 Group financial statements. It also 
includes an assessment of the significant estimates and judgments made by the Directors in the preparation of the Group financial statements, 
and of whether the accounting policies are appropriate to the Group’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 Group financial statements 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 Group financial statements.
Opinion	 In our opinion:
the Group financial statements give a true and fair view, in accordance with IFRS 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; and
the information given in the Directors’ Report is consistent with the Group financial statements.
KPMG	 Audit	 Plc
Chartered Accountants 8 Salisbury Square
Registered Auditor London, EC4Y 8BB
1 March 2007 United Kingdom
•
•
•
Independent Auditor’s Report to the members of Filtrona plc www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 81
Filtrona plc balance sheet
at 31 December 2006
        2005
       2006 Restated*
      Note £m £m
Fixed	 assets    
Investment in subsidiary undertaking      2,8	 275.8 274.6
    
Current	 assets    
Debtors      3 0.1 –
    
Current	 liabilities    
Creditors: amounts falling due within one year      4 (21.5) (5.7)
Net	 current	 liabilities       (21.4) (5.7)
Net	 assets      	 254.4 268.9
    
Capital	 and	 reserves    
Issued capital      5	 54.8 54.8
Capital redemption reserve      6 0.1 0.1
Profit and loss account      6 199.5 214.0
Shareholders’	 funds:	 equity	 interests      	 254.4 268.9
* Restated on adoption of FRS 20: Share-based payment 
The financial statements on pages 81 to 85 were approved by the Board of Directors on 1 March 2007 and were signed on its behalf by:
Steve	 Dryden
Finance Director
Reconciliation	 of	 movement	 in	 shareholders’	 funds
        2005
       2006 Restated*
       £m £m
Opening	 shareholders’	 funds	 as	 previously	 reported	    	 268.4 –
Prior year adjustment (adoption of FRS 20)      	 0.5 –
Opening	 shareholders’	 funds	 restated       268.9 –
Loss for the financial period       (0.2) (0.1)
Dividends paid       (14.3) (4.7)
New share capital subscribed        – 274.1
Share-based payments       1.2 0.5
Acquisition of employee trust shares       	 (1.2) (1.0)
Redemption of £1 preference shares       – 0.1
Closing	 shareholders’	 funds       254.4 268.9
* Restated on adoption of FRS 20: Share-based payment  www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 82
Accounting policies
a	 	 Basis 	 of	 preparation
The financial statements have been prepared under the historical cost convention and have been prepared in accordance with the 
Companies Act 1985 and applicable UK accounting standards. 
Under Section 230(4) of the Companies Act 1985, Filtrona plc is exempt from the requirements to present its own profit and loss account. 
The following accounting policies have been consistently applied except as noted in paragraph b below.
b	 	 Change 	 in	 accounting	 policy
During the year the Company adopted the following accounting standards:
FRS	 20:	 Share-based payment (‘FRS	 20’)	 and	 UITF	 41:	 Scope of FRS 20
The impact of recognising the value of share options granted to employees working in subsidiary undertakings as an increase in the cost 
of investment in those subsidiary undertakings was to increase shareholders’ equity at 1 January 2006 by £0.5m.
c	 	 Investment 	 in	 subsidiary	 undertaking
Investment in subsidiary undertaking is held at cost less any provision for impairment.
d	 	 Share-based 	 payments
The fair value of share options is measured at grant date. It is recognised as an addition to the cost of investment in the subsidiary in 
which the relevant employees work over the period between grant and vesting date of the options, with a corresponding adjustment 
to reserves.
The shares held in the Filtrona Employee Benefit Trust for the purpose of fulfilling obligations in respect of share option plans are treated 
as belonging to the Company and are deducted from shareholders’ funds.
e	 	 Dividends
Dividends unpaid at the balance sheet date are only recognised as a liability if they are authorised and no longer at the discretion of the 
Company. Dividends that do not meet these criteria are disclosed in the notes to the financial statements. www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 83
Notes 
1.	 Net	 operating	 charges	 The auditor was paid £4,115 (2005: £4,000) for the statutory audit of the Company. Fees paid to the Company’s auditor for services other 
than the statutory audit of the Company are disclosed on page 61.
The Directors’ remuneration, which was paid by Filtrona International Ltd, is disclosed in the Report of the Remuneration Committee on 
pages 33 to 40.
2.	 Investments	 held	 as	 fixed	 assets
       	 Investment 	 in	 	 	 	 	 	 	 	 	 subsidiary	 	 	 	 	 	 	 	 	 undertaking
	 	 	 	 	 	 	 	 2006
	 	 	 	 	 	 	 	 £m
At beginning of year as previously stated        274.1
Adoption of FRS 20        0.5
At beginning of year restated        274.6
Additions        1.2
At	 end	 of	 year	 	 	 	 	 	 	 	 275.8
3.	 Debtors
         2006  2005
         £m	 £m
Corporate taxes      0.1  –
4.	 Creditors
         2006  2005
      	 	 	 £m  £m
Amounts	 falling	 due	 within	 one	 year  
Amounts owed to subsidiary undertakings      21.5	 5.7
5.	 Share	 capital
         2006  2005
         £m  £m
Authorised: 500 million (2005: 500 million) ordinary shares of 25p (2005: 25p) each   125.0  125.0
Issued	 and	 fully	 paid	 ordinary	 shares	 of	 25p	 (2005:	 25p)	 each     54.8  54.8
Number	 of	 shares	 in	 issue
Beginning and end of year     	 219,326,795  219,326,795
On 8 June 2005 a resolution was passed reducing the ordinary share capital by 100p per share (total: £219.3m), and on 9 June 2005 this 
was confirmed by an Order of the High Court. The amounts arising were used to create a profit and loss account reserve in the Company. 
Redeemable	 preference	 share	 capital
On 6 May 2005 the Company issued 50,000 redeemable preference shares of £1 each to Bunzl. On 11 May 2005 all the redeemable 
preference shares were redeemed for cash at par from existing resources.  www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 84
Notes 
6.	 Movements	 on	 reserves
	 	 	 	 	 	 	 Capital 	 	 Profit
	 	 	 	 	 	 	 redemption 	 	 and 	 loss
	 	 	 	 	 	 	 reserve	 account
	 	 	 	 	 	 	 £m	 £m
At beginning of year as previously stated       0.1 213.5
Adoption of FRS 20        0.5
At beginning of year restated       0.1 214.0
Retained loss for the year ended 31 December 2006        (0.2)
Acquisition of employee benefit trust shares        (1.2)
Share-based payments        1.2
Dividends paid        (14.3)
At	 end	 of	 year	 	 	 	 	 	 	 0.1	 199.5
As permitted by section 230 of the Companies Act 1985, the profit and loss account of the Company has not been separately presented 
in these financial statements. The loss attributable to equity holders included in the accounts of the Company is £0.2m (2005: £0.1m).
Included in the profit and loss account are accumulated share-based payments of £1.7m (2005: £0.5m) which are not distributable.
7.	 Dividends
	 	 	 	 	 	 Per 	 share	 	 Total
  
     2006 2005 2006 2005
     p p £m £m
2005 interim: paid 31 October 2005      2.13  4.7
2005 final: paid 28 April 2006    	 	 4.27  9.3
2006 interim: paid 27 October 2006     2.30  5.0 
2006 proposed final: payable 4 May 2007    	 4.60	 	 10.1 
    	 6.90 6.40 15.1 14.0 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 85
8.	 Principal	 subsidiary	 undertakings	 	 	 	 	 	 	 	 	 Country 	 of
	 	 	 	 	 	 	 		 incorporation
Filtrona Extrusion Inc        US
Globalpack Ind e Comercio Ltda        Brazil
Moss Plastic Parts Ltd        UK
Filtrona BV       The Netherlands
Cigarette Components Ltd        UK
Filtrona de Mexico S de RL de CV        Mexico
PT Filtrona Indonesia        Indonesia
Filtrona International GmbH        Germany
Filtrona International Ltd        UK
Filtrona United Kingdom Ltd        UK
FIL International Ltd        UK
Filtrona Finance Ltd        UK
Filtrona Holdings Corp        US
FIL Holdings Corp        US
The companies named above are the principal subsidiary undertakings of Filtrona plc and are included in the consolidated financial 
statements of the Group. The wholly owned investments in the companies above relate to ordinary shares or common stock. The 
principal country in which each company operates is the country of incorporation.
Filtrona International Ltd is the only direct subsidiary of Filtrona plc. 
  www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 86
Independent Auditor’s Report to the members of Filtrona plc
We have audited the parent company financial statements of Filtrona plc for the year ended 31 December 2006 which comprise the 
balance sheet and the related notes. These parent company financial statements have been prepared under the accounting policies set 
out therein. We have also audited the information in the Report of the Remuneration Committee that is described as having been audited.
We have reported separately on the Group financial statements of Filtrona plc for the year ended 31 December 2006. 
 
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, the Report of the Remuneration Committee and the parent company 
financial statements in accordance with applicable law and UK Accounting Standards (UK Generally Accepted Accounting Practice) are 
set out in the Statement of Directors’ Responsibilities on pages 31 and 32.
Our responsibility is to audit the parent company financial statements and the part of the Report of the Remuneration Committee 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 parent company financial statements give a true and fair view and whether the parent 
company financial statements and the part of the Report of the Remuneration Committee to be audited have been properly prepared in 
accordance with the Companies Act 1985. We also report to you whether in our opinion the information given in the Directors’ Report is 
consistent with the parent company financial statements. The information given in the Directors’ Report includes that specific information 
presented in the Business Review that is cross referred from the Business Review section of the Directors’ Report.
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 read the other information contained in the Annual Report and consider whether it is consistent with the audited parent company 
financial statements. We consider the implications for our Report if we become aware of any apparent misstatements or material 
inconsistencies with the parent company 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 parent company financial 
statements and the part of the Report of the Remuneration Committee to be audited. It also includes an assessment of the significant 
estimates and judgments made by the Directors in the preparation of the parent company financial statements, and of whether the 
accounting policies are appropriate to the 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 parent company financial statements and the part of the Report 
of the Remuneration Committee 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 parent company financial 
statements and the part of the Report of the Remuneration Committee.
Opinion
In our opinion:
the parent company financial statements give a true and fair view, in accordance with UK Generally Accepted Accounting Practice,  
of the state of the Company’s affairs as at 31 December 2006;
the parent company financial statements and the part of the Report of the Remuneration Committee 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 parent company financial statements.
KPMG	 Audit	 Plc
Chartered Accountants 8 Salisbury Square
Registered Auditor London, EC4Y 8BB
1 March 2007 United Kingdom
•
•
• www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 87
Advisors’ details and investor information
Secretary	 and	 Registered	 Office
Jon Green
Avebury House, 201–249 Avebury Boulevard, Milton Keynes, Buckinghamshire MK9 1AU
Company Number 05444653
www.filtrona.com
Financial	 advisor	 and	 stockbroker
JPMorgan Cazenove 
20 Moorgate, London EC2R 6DA
Solicitors
Slaughter and May
One Bunhill Row, London EC1Y 8YY
Auditor
KPMG Audit Plc
8 Salisbury Square, London EC4Y 8BB
Principal	 bankers
Lloyds TSB Bank plc
25 Gresham Street, London EC2V 7HN
The Royal Bank of Scotland plc
135 Bishopsgate, London EC2M 3UR
Registrar
If you have any questions about your shareholding, please contact, in the first instance:
Computershare Investor Services plc
PO Box 82, The Pavilions, Bridgwater Road, Bristol BS99 7NH
Telephone 0870 702 0003
Computershare also has an internet facility whereby shareholders in Filtrona plc are able to access details of their shareholding.  
You can access this service at www.computershare.com. 
Electronic	 communication
As an alternative to receiving documentation through the post, the Company offers shareholders the option to receive by email, a 
notification that shareholder documents (including the Annual and Interim Reports, Notice of Shareholder Meetings, Proxy Forms  
etc.) are available for access on the Company’s website. If you wish to make such an election, you should register online at 
www.computershare.com. If you have already made such an election you need take no further action. Registration is entirely  
voluntary and you may request a hard copy of the shareholder documents or change your election at any time. 
CREST
Share	 Settlement	 System
The Company entered the CREST system on listing and the ordinary shares are available for settlement in CREST. As the membership 
system is voluntary, shareholders not wishing to participate can continue to hold their own share certificates.
Annual	 General	 Meeting
The Annual General Meeting of the Company will be held at the Holiday Inn Hotel, 500 Saxon Gate West, Milton Keynes, 
Buckinghamshire MK9 2HQ on Monday 30 April 2007 at 12 noon.  www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 88 www.filtrona.com Filtrona plc  Annual Report and Accounts 2006 88
Annual General Meeting   30 April 2007 
Final dividend     4 May 2007
Interim announcement   August 2007
Interim dividend    October 2007
Financial calendar 2007 Board photography by Mike Austen
Product photography by Lee Funnell
Filtrona plc at a glance
Plastic Technologies
Plastic Technologies produces, sources and distributes 
protection and finishing products, self-adhesive tear tape 
and certain security products as well as proprietary and 
customised plastic extrusions and packaging items for 
consumer products.
Protection and Finishing Products
Facilities in the UK, Continental Europe, US, 
Canada, Mexico, and Brazil provide rapid 
supply of primarily plastic products for general 
protection, masking, electrical, fastening, 
security and finishing applications.
Coated and Security Products
Worldwide operations provide self-adhesive 
tear tape and coated film products for use in 
brand promotion, document authentication, 
personal identification and other security 
applications, including track and trace 
technology.
Plastic Profile and Sheet
Locations in the US, Mexico and  
the Netherlands supply thermoplastic profile, 
sheet and speciality tubes for a selected 
range of applications including lighting, 
fencing, signs and displays, refrigeration, 
medical and traffic control.
Consumer Packaging
Globalpack, based in Brazil, is a leading 
speciality manufacturer of complete  
plastic packaging sets for the cosmetic  
and personal care, pharmaceutical,  
food and chemical industries.
Cigarette Filters
Twelve locations worldwide produce a  
wide range of filters from monoacetate to 
multi-segment special filters with sophisticated 
adsorbent materials. 
Bonded Fibre Components
With locations in the US, Germany and
China, Fibertec is the leading manufacturer
of bonded fibre components used in a
wide range of consumer disposable
products including writing instruments,
inkjet printer reservoirs, medical devices
and air fresheners.
Plastic Technologies overview
    2006 2005 %
Sales  £289.5m £273.3m  +5.9
Operating profit*  £41.4m £37.6m  +10.1
Margin  14.3% 13.8% 
* before intangible amortisation
Fibre Technologies overview
    2006 2005 %
Sales  £254.7m £240.4m +5.9
Operating profit*  £28.1m £26.9m +4.5
Margin  11.0% 11.2%
Fibre Technologies
Fibre Technologies focuses on the production and 
supply of special filters for cigarettes and bonded fibre 
products such as reservoirs and wicks for writing 
instruments and printers, household products and 
medical devices.
* before intangible amortisation
www.filtrona.com At a glance Filtrona plc  Annual Report and Accounts 2006
Filtrona plc
Avebury House
201–249 Avebury Boulevard
Milton Keynes
Buckinghamshire
MK9 1AU
United Kingdom
T: +44 (0)1908 359100
F: +44 (0)1908 359120
E: enquiries@filtrona.com
www.filtrona.com
Filtrona plc
Annual Report and Accounts 2006
Filtrona is an international, market leading, 
speciality plastic and fibre products supplier.
By concentrating on niche international markets 
Filtrona has been able to establish and develop 
strong positions in its chosen product categories. 
It is a well invested global business, headquartered 
in the UK, with 37 manufacturing facilities,  
32 distribution units and four research facilities  
spread across 23 countries in the Americas, 
Europe and Asia. Filtrona employs some 5,600 
people worldwide.
Filtrona plc
01 Highlights
02 Principal International Developments
 Business Review
04 Chairman’s Statement
06 Chief Executive’s Review
20 Financial Review
23 Analysis of Principal Risks
 Governance
26 Board of Directors
29 Directors’ Report
33 Report of the Remuneration Committee 
41 Corporate Governance Report
46 Corporate Social Responsibility Report
 Financial Statements
49 Consolidated income statement
50 Consolidated balance sheet
51 Consolidated statement of cash flows
52 Consolidated statement of recognised  
income and expense
53 Accounting policies
58 Notes
80 Independent Auditor’s Report to the members 
of Filtrona plc
81 Filtrona plc balance sheet
82 Accounting policies
83 Notes 
86 Independent Auditor’s Report to the members 
of Filtrona plc
 Shareholder Information
87 Advisors’ details and investor information
88 Financial calendar 2007
Cautionary Statement 
Except for the historical information contained herein, the matters discussed in this Annual Report and 
Accounts include forward looking statements that involve risk and uncertainties that could cause actual 
results to differ materially from those predicted by such forward looking statements. These risks and 
uncertainties include international, national and local conditions as well as competition. The Company 
undertakes no obligation to publicly update any statement, whether as a result of new information, future 
events or otherwise.
Fibertec (cover)
Filtrona Fibertec provides important components  
for point of care medical test kits. Each component 
within the diabetes test device shown incorporates 
1,400 metres of fibre.