Further to notifications in February, I would like to take this opportunity to provide you with an update regarding the current paper supply situation which is affecting the UK and Irish markets.

The consequences of weak demand resulting in many of the large mill groups closing or mothballing production in Europe, combined with evidence that Europe still has one of the lowest market prices for paper, has resulted in the paper mills taking the decision to switch supply to other, more profitable markets. This continues to reduce availability across the UK and Irish market.

Spot buy (white box) copier paper is now virtually unavailable in the UK and Irish markets and whilst at TBG we look to source daily for tonnage, any product that we do manage to secure is quickly sold. This is causing an adverse impact on availability.

The whole market is affected with both the paper mill groups and the paper merchants allocating supply into all channels. In recent weeks, the retail, contract channels and some large dealer contracts have been severely affected by their action.

The lack of availability is still causing significant paper price increases across the whole market and these are likely to continue until the mills start to switch supply back into the European market. All indications are showing that the current situation will continue into 2011.

Due to the challenges we are facing as detailed above we are incurring price increases across our branded and white box paper codes which we are unable to absorb and as such we will be passing on the price increases from the 5th July.

The Price increase will be 4%. These increases are over and above any increases already communicated to you previously.

Please be assured that our purchasing department are investigating all possible sources of paper with the objective of maintaining supply wherever possible and we will of course keep you updated with any further price fluctuations as the market continues to suffer from these challenges.

If you have any queries regarding these products or to confirm your new pricing prices, please contact your account sales manager at Total Business Group.

Regards

Rob Winter