Trading Statement

Smith (DS) PLC
20 April 2005

20 April 2005

                                  DS SMITH PLC

             PRE-CLOSE TRADING UPDATE AND EARLY ADOPTION OF FRS 17


DS Smith Plc (LSE:SMDS), the international packaging manufacturer and office
products wholesaler, is releasing the following trading update prior to its year
end on 30 April 2005.

Since our interim results in December, the Group's underlying trading has been
in line with our expectations at that time. Following completion of the
triennial valuation of the UK pension scheme, a number of changes have been made
in relation to the scheme and the Board has decided to adopt FRS17 for the
current financial year; the adoption of FRS 17 will result in profit before tax,
amortisation of intangibles and exceptional items being approximately £5.5
million higher than previously expected.

Review of trading

In the second half of the year we have made progress in UK Corrugated Packaging
due to improved results in our existing UK business and the benefits from the
acquisition of Linpac Containers.  Our continental European corrugated
operations and the Spicers Office Products Wholesaling business have also
continued to perform well.  As indicated previously, the Group's overall result
has been affected by highly competitive trading conditions and increased energy
costs in Paper, a sharp rise in polymer costs in Plastic Packaging, together
with a significant charge in respect of the UK pension scheme for the first time
for many years.

Paper and Corrugated Packaging

Our UK Paper business has continued to experience a severe squeeze on its
margins in corrugated case material (CCM).  This has been driven by a
combination of depressed prices resulting from excess CCM capacity in Europe,
markedly higher energy costs and the rising cost of its feedstock, recovered
paper.  We increased CCM prices in mid March to recover some of the cost
increases.  Given the late stage in our financial year, this increase will not
yield a significant benefit to the 2004/05 results.  In March, we entered into a
long-term agreement with BPB plc for the supply of plasterboard liner paper,
consistent with our drive to increase sales of higher added-value products.

The UK Corrugated Packaging operations have maintained their progress and
integration of the Linpac Containers business is advancing well; we remain
confident of generating the expected synergies over the timescale indicated in
December and, as previously indicated, we anticipate incurring exceptional
restructuring charges of approximately £6 million in this financial year.  In
western continental Europe, trading conditions for the paper and corrugated
operations remain challenging but our businesses in Poland and Turkey and our
associate in the Ukraine have continued to make good progress.

Plastic Packaging

Results in Plastic Packaging have been adversely affected in the second half of
the year by the sharp rise in polymer prices which are now some 35-40% higher
than at the start of this financial year for our main polymer types.  Although
we have raised our selling prices several times during the year, it has not been
possible to recover these cost increases in full.  The cumulative effect of this
under-recovery on the division's result for the year is expected to be
approximately £2.5 million.  The high polymer prices have also resulted in
reduced demand from some customers deferring orders; this has mainly affected
returnable transit packaging where sales have also been affected by a slowdown
in new crate contracts after several years of strong growth.  Liquid packaging
and dispensing has performed steadily, benefiting especially from improved
results in the tap business following last year's programme to strengthen sales
and reduce costs.

Our actions have resulted in some improvement in the combined result of the
three smaller speciality businesses.  However, the Group has decided to take an
exceptional impairment charge, in the current year, of approximately £5.8
million against the goodwill of the packaging management business, acquired in
1998; this business is trading at around breakeven and generating cash.

Office Products

Spicers has continued to perform in line with its objectives.  The UK business
has maintained its sales growth and good financial performance in the second
half of the year, while the French business continues to perform well despite a
challenging market environment.  Spicers Germany is expected to be in profit for
the current financial year.  The Spanish business continues to grow well, and
initial sales in Italy, following our start-up last November, remain
encouraging.  The John Dickinson manufacturing business continues to be affected
by difficult trading conditions.

Refinancing

Following on from the $200 million US private placement completed in August
2004, the Group has signed a new £250 million 5-year committed banking facility.
This will replace existing shorter-dated and more expensive facilities,
thereby extending the average maturity of the Group's debt to 6.9 years, and
reducing its cost.

International Financial Reporting Standards (IFRS)

As stated previously, the Group's conversion programme to IFRS is progressing
satisfactorily with no problematical issues identified to date.  A
reconciliation of the UK GAAP 2004/05 results to IFRS will be provided after the
publication of the 2004/05 preliminary results.

Pension Scheme

Following the triennial valuation of DS Smith's UK defined benefit pension
scheme, as at 5 April 2004, the Group has introduced a number of changes, which
have been accepted by the scheme's Trustee Board and scheme members.  From 1 May
2005 the scheme will be closed to new employees, who will be offered a new
defined contribution scheme.  The Group, as previously indicated, will raise its
cash contributions to the defined benefit scheme from £10 million a year to £14
million a year.  At the same time, scheme members will either increase their
contributions to the scheme, phased over two years, or retain their existing
contribution level, while reducing the rate at which their pension benefits
build up for future service.

DS Smith has previously reported under the SSAP 24 pensions accounting standard.
Following the 2004 triennial valuation, and in anticipation of the
introduction of IFRS for financial year 2005/06, DS Smith will adopt FRS 17 for
the financial year 2004/05.  The FRS 17 accounting treatment being adopted is
consistent with that which the Group will adopt under IAS 19, in effect bringing
forward the most material aspect of the introduction of IFRS for DS Smith and
aiding comparison between financial years.  The comparative FRS 17 figures for
2003/04, which will be used to restate last financial year's results, were
detailed in Note 6 to the 2003/04 accounts.

Under FRS 17, the anticipated charge to the 2004/05 profit and loss account for
the pension scheme is £10.5 million; the previously estimated charge under SSAP
24 was £16 million.  The FRS 17 deficit on the UK defined benefit pension scheme
as at 30 April 2004, of £78.1 million (£54.6 million after deferred tax), will
be recognised as a liability in the opening Group balance sheet and the previous
SSAP 24 pension prepayment, of £15.1 million (£10.6 million after deferred tax),
will be written off.  As a result, DS Smith Plc Group's consolidated
shareholders' funds as at 30 April 2004 of £562.0 million will be reduced by
£65.2 million.  Further details of the effect of the adoption of FRS 17 are set
out below in an appendix.

Outlook

In common with many other companies, we shall be entering 2005/06 with energy
and raw material costs at a considerably higher level than at the outset of 2004
/05.  We are responding to this through further cost reduction and we are also
looking to offset these additional costs through price increases.  Despite these
cost pressures, we expect the synergies arising from the Linpac Containers
acquisition, and a further advance at Spicers, to enable us to make some
underlying progress in the coming financial year.  The 2005/06 result will also
reflect the adoption of IFRS which will include the accounting changes relating
to pensions referred to above.

DS Smith's Preliminary results for the year to 30 April 2005 will be announced
on 30 June 2005.


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 - [phone].  A
recording of this conference call will be available for one week from
approximately 1.00pm BST today.  The dial-in numbers for the recording are:  UK
callers - 020 7769 6425; International callers - [phone] (Security code
514719#)

Appendix

Effect of Adopting FRS 17 on the Profit and Loss Account

                                               Restated           Anticipated
                                                2003/04               2004/05
                                                     £m                    £m
Pension charge against operating profit:
Paper and Corrugated Packaging                    (9.1)                  (8.3)
Plastic Packaging                                 (1.2)                  (1.0)
Office Products Wholesaling                       (2.0)                  (1.8)
Office Products Manufacturing                     (1.1)                  (1.0)
                                                 (13.4)                 (12.1)

Other finance (cost)/income                       (3.2)                   1.6

Total FRS 17 charge                              (16.6)                 (10.5)


As previously reported, the Profit and Loss Account charges under SSAP 24 were:

     2003/04: nil
     2004/05: expected to be approximately £16 million


Effect of Adopting FRS 17 on the Group Balance Sheet
                                                                             £m

Consolidated shareholders' funds, 30 April 2004, as previously stated     562.0

Reversal of SSAP 24 prepayments and liabilities
-  write off balance sheet prepayment                                     (15.1)
-  write back deferred tax credit associated with prepayment                4.5
Effect of adoption of FRS 17:
-  include net liabilities of pension scheme                              (78.1)
-  include deferred tax asset associated with pension scheme liabilities   23.5

Consolidated shareholders' funds, 30 April 2004, restated for FRS 17      496.8



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