Trading Statement

Smith (DS) PLC 13 October 2005 13 October 2005 DS SMITH PLC PRE-CLOSE TRADING UPDATE In accordance with its established practice, DS Smith Plc, the international packaging manufacturer and office products wholesaler, today issues the following trading update ahead of its interim results announcement for the half year to 31 October 2005, which will be made on 7 December 2005. These figures will be the first to be produced under International Financial Reporting Standards. Group The outlook for the Group remains broadly unchanged from that stated in the AGM trading update released on 5 September 2005. As previously indicated, trading conditions continue to be challenging and it is proving difficult to mitigate the extraordinary rise in energy costs. The Group's result in the first half of this financial year will be significantly lower than the strong result in the comparable period of last year. We continue to take action to reduce costs, improve the sales mix and actively manage prices. Paper and Corrugated Packaging Selling prices of paper and corrugated packaging continue to be affected by lower box demand and European over-capacity in corrugated case materials (CCM), while the sharp rise in energy costs has exacerbated the erosion of margins. In Paper, we are reducing our emphasis on CCM through growing sales of higher added-value plasterboard liner while in UK Corrugated Packaging we are increasingly benefiting from the restructuring we started in autumn 2004. As part of our strategic drive to grow our business in eastern Europe, the new greenfield corrugated packaging factory at our fast-growing Polish business is on course to commence production before the end of November. During the last month, CCM prices have increased in continental Europe but it is too early to know what effect this will have on our business. Plastic Packaging As reported in September, sales of Plastic Packaging in the early months of this financial year were slow but our forward order book is strengthening, particularly in returnable transit packaging. Margins continue to be affected by the under-recovery of the polymer cost increases experienced during the last financial year. Polymer prices have been rising again since August and we are driving hard to recover these higher costs. Restructuring of our European liquid packaging and dispensing operations has resulted in one-off costs in the first half of the year. We continue to expect the 2005/06 profits in this division to be strongly weighted towards the second half of the year. Office Products Wholesaling Spicers' developing businesses in continental Europe continue to make progress. Last month, we further extended our European coverage through the acquisition of Timmermans NV, the largest office products wholesaler in the Benelux region. Although sales at Spicers' established UK and French businesses are ahead of last year, profit in the UK is being adversely affected by the faster sales growth of lower margin electronic office supplies relative to other products. Consequently, Spicers' profit in the first half of this financial year is expected to be lower than in the first half of 2004/05 and, for the full year, it will be challenging to exceed last year's result. International Financial Reporting Standards (IFRS) DS Smith has today published information about the restatement of its results for financial year 2004/05, as prepared under International Financial Reporting Standards. Full details may be obtained from the Investor Relations/Financial Reports section of the Group's website at: http://www.dssmith.uk.com/invest-report.asp The principal changes to the Group's 2005/06 results, as reported under IFRS, from those that would have been reported under UK GAAP will be: • A charge against operating profit in respect of share-based payments, which will be allocated across the segments. For 2004/05, the UK GAAP results included a nil charge whereas the IFRS charge was £1.1m; this IFRS charge was lower than a typical full year's charge because of the IFRS transitional rules, consequently charges for 2005/06 and future years will be somewhat higher. • Operating profit will no longer include the amortisation of goodwill intangible assets (2004/05: £8.8 million) but it will include the amortisation of intellectual property intangible assets (2004/05: £0.6 million). Given the insignificant amount of the intellectual property amortisation charge, this will not be excluded from any re-presentation of the results on an adjusted basis, as it was previously. • Stating the share of associates' results after interest and tax will reduce profit before tax but not affect earnings per share. For 2004/05, the effect of stating associates' results after interest and tax is a reduction of £0.9 million compared with UK GAAP. • The segmental analysis will report UK Paper and Corrugated Packaging and Continental European Corrugated Packaging as separate segments. Enquiries DS Smith Plc 020 7932 5000 Tony Thorne, Group Chief Executive Gavin Morris, Group Finance Director Peter Aubusson, Group Communications Manager Financial Dynamics 020 7269 7291 Richard Mountain/Robert Gurner A conference call for analysts and investors, hosted by Tony Thorne and Gavin Morris, will take place today at 9.00am BST. The dial-in numbers are: UK participants - 0845 634 0047 International participants - +44 20 7154 2638 Alternative back-up number - +353 1 436 4259 A recording of this conference call will be available for one week from 1.00pm BST today. The dial-in numbers for the recording are: UK callers - 020 7769 6425 International callers - +44 20 7769 6425 Security code for the replay - 581016# This information is provided by RNS The company news service from the London Stock Exchange

Companies

Smith (DS) (SMDS)
UK 100