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 - [phone]

Alternative back-up number - [phone]


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 - [phone]

Security code for the replay - 581016#


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