Closure of mill

Smith (DS) PLC
20 February 2006

20 February 2006


              DS Smith Proposes Closure of its Sudbrook Paper Mill


As indicated at the Interim Results in December, a number of the Group's
operations are under close scrutiny as a result of the difficult trading
environment and high energy costs.  DS Smith's UK Paper division, St Regis, has
today announced the proposed closure of its Sudbrook Mill in Monmouthshire,
which produces approximately 150,000 tonnes per annum of semi-chemical fluting
paper, a speciality form of corrugated case material (CCM).  It is proposed that
the closure will be implemented by the end of May 2006.



Sudbrook Mill is the most energy-intensive production operation within the Group
and its annual energy costs have approximately doubled over the last three
years.  St Regis has been unable to pass this increase on to its customers and
the mill is now making annualised operating losses of approximately £3 million.
The decision to propose the closure of the mill has also been made in the
context of demand for the mill's speciality product continuing to fall as
customers switch to alternative lower-cost types of paper.



Consultations have commenced with the mill's 135 employees and their
representatives, with a view to reducing and mitigating the effects of the
proposed closure.  If the closure is confirmed following the consultation, every
effort will be made to assist employees in finding alternative positions within
the Group or with other employers in the area.



It is estimated that the proposed closure will result in an exceptional charge
to the profit and loss account in the financial year 2005/06 of the order of £22
million; approximately one third will arise from redundancy costs and other cash
costs, and the remainder will be the write down of assets.  It is anticipated
that the cash outflow, which will occur in the financial year 2006/07, will be
largely offset by asset sales and the realisation of working capital.



The proposed closure of Sudbrook Mill is an important step towards raising the
returns of the Group's UK Paper and Corrugated Packaging operations.  Following
the proposed closure of Sudbrook Mill, St Regis' principal mill at Kemsley will
represent approximately 60% of the division's output of over 900,000 tonnes per
annum; Kemsley Mill is ranked in the top quartile of European CCM mills in terms
of cost competitiveness.


Enquiries

DS Smith Plc                                           020 7932 5000
Peter Aubusson, Group Communications Manager



Financial Dynamics                                     020 7269 7291
Richard Mountain/Susanne Walker



NOTES TO EDITORS

St Regis Paper Company

DS Smith's UK Paper division, St Regis, currently has six mills and is the
leading UK producer of recycled paper.  75% of its output is used in the
construction of corrugated boxes and trays.  The semi-chemical fluting produced
at Sudbrook Mill is a speciality corrugated packaging paper; its raw material is
a mixture of fibre obtained from recycled paper and wood pulp.


                      This information is provided by RNS
            The company news service from the London Stock Exchange