Sale of Taplow Site and Proposed Closure of Taplow Mill

Taplow Mill, which currently manufactures 95,000 tonnes per annum of corrugated case material (CCM), has been adversely affected by difficult market conditions and substantial increases in energy costs.

01/09/06 DS Smith Plc (SMDS), the international packaging manufacturer and office products wholesaler, announces further progress in the strategic rationalisation of its UK Paper and Corrugated operations. DS Smith has sold its site at Taplow near Maidenhead, Berkshire to Towntalk Limited, a commercial property developer, for a cash consideration of £30.25 million and announces the proposed closure of its Taplow Mill.

Taplow Mill, which currently manufactures 95,000 tonnes per annum of corrugated case material (CCM), has been adversely affected by difficult market conditions and substantial increases in energy costs. It made losses in financial year 2005/06 and is not expected to return to adequate profitability. Consultation will commence immediately with the Mill’s 85 employees, with a view to mitigating the effects of the proposed closure. It is proposed that the closure of the Mill will be implemented by the end of October 2006. The Group’s Severnside waste collection depot, which also operates on the Taplow site, will be relocated.

The consideration for the sale of the site will result in an exceptional profit in the current financial year of £20.7 million, net of the book value of the site of £9.0 million and related disposal costs. It is also estimated that the proposed closure and relocation will result in an exceptional charge to the profit and loss account in the current financial year of the order of £12 million; approximately one third of which will be cash costs and the remainder will be the write-down of assets.

The proposed closure of Taplow Mill is another important step towards raising the returns of the Group’s Paper operations. Following the proposed closure of Taplow Mill, St Regis’ principal mill at Kemsley will represent approximately 70% of the division’s output of over 840,000 tonnes per annum of paper; Kemsley Mill is ranked in the top quartile of European CCM mills in terms of competitiveness.