Annual Report 2004
DS Smith Plc
4-16 Artillery Row
London SW1P 1RZ
Telephone +44 (0) 20 7932 5000
Fax +44 (0) 20 7932 5003
Email ir@dssmith.co.uk
www.dssmith.uk.com
DS Smith Plc Annual Report 2004 Our strategy is to improve and develop
our two principal activities, Packaging 
and Office Products Wholesaling. 
We are improving operational performance
across the Group through better products, a
more competitive cost base, increased efficiency
and raised service levels for our customers.
We are developing the Group’s strong 
market positions through organic development
and acquisitions, focusing particularly on
opportunities in our existing markets. 
Contents
1 Highlights
2 Group Overview
4 Chairman’s Statement
5 Chief Executive’s Review
8 Operating Review 
18 Financial Review
22 Directors and Company Secretary 
23 Corporate Social Responsibility Review
26 Corporate Governance
28 Report on Remuneration 
35 Directors’ Report
37 Independent Auditor’s Report
38 Financial Statements and 
Notes to the Financial Statements 
63 Five Year Financial Summary
64 Notice of Annual General Meeting
68 Shareholder Information
IBC Principal Locations
PRINCIPAL LOCATIONS
Front cover:
Efficiency and flexibility Automated
transfer systems optimise the handling of 
large and small batch sizes of corrugated
board to meet customers’ needs. Published by Black Sun plc +44 (0)20 7736 0011. Printed by the colourhouse.
Countries in which we operate:
Australia
Belgium
Czech Republic
Dominican Republic
France
Germany
Ireland
Israel
Italy
New Zealand
Poland
Spain
Turkey
Ukraine
United Kingdom
USA
Group office
DS Smith Plc
4-16 Artillery Row
London SW1P 1RZ
Telephone +44 (0) 20 7932 5000
Divisional offices
DS Smith Packaging
Pilgrim House
2-6 William Street
Windsor
Berkshire SL4 1BA
Telephone +44 (0) 1753 754 380 
LINPAC Containers
Evan Cornish House
Windsor Road
Louth
Lincolnshire LN11 0LX
Telephone +44 (0) 1507 601 601 
Kaysersberg Packaging S.A.S.
BP 1
68320 Kunheim
France
Telephone +33 (0) 3 89 72 24 00
St Regis Paper Company Limited
Mill Lane
Taplow 
Maidenhead 
Berkshire SL6 0AF
Telephone +44 (0) 1628 798 111
DS Smith Plastics
Brownsover Road 
Rugby
Warwickshire CV21 1HL
Telephone +44 (0) 1788 535 329
Spicers Limited 
Homewood
Sawston
Cambridgeshire CB2 4JG
Telephone +44 (0) 1223 834 555
John Dickinson Stationery Limited 
Sawston
Cambridgeshire CB2 4XD
Telephone +44 (0) 1223 830 083 HIGHLIGHTS
FINANCIAL
• Proﬁt before tax
(1)
up 2% at £81.4m
• Cash inﬂow after dividends but before net acquisitions up 3% at £33.1m
• Earnings per share
(2)
up 1% at 16.9p
• Return on average capital employed
(1)
11.1% (2002/03: 11.3%)
• Gearing 48.9% (42.8%)
• Full year dividend maintained at 8.2p
(3)
• Results after exceptional items and amortisation of intangibles: proﬁt before
tax £77.8m (£69.0m); earnings per share
(4)
15.9p (13.7p)
OPERATIONS
• Robust performance, given the weak paper market
• Strong improvement in Corrugated Packaging
• Continued recovery in Ofﬁce Products Wholesaling
• Strategic development through the £167m acquisition of LINPAC Containers
(1)
before exceptional items and amortisation of intangibles
(2)
before exceptional items and amortisation of intangibles and restated for the bonus element of the rights issue
(3)
interim and prior year dividends restated for the bonus element of the rights issue
(4)
restated for the bonus element of the rights issue 
 
20
100
40
60
80
OPERATING PROFIT* (£ MILLION)
2003 2004 2003 2004 2003 2004
88.0
88.8
67.8
20.2
65.7
23.1
 
20
5
10
15
RETURN ON AVERAGE CAPITAL 
EMPLOYED* (%)
2003 2004 2003 2004 2003 2004
11.3
10.7
14.0
11.1
17.3
9.9
* before exceptional items and amortisation of intangibles
PACKAGING OFFICE
PRODUCTS
GROUP PACKAGING OFFICE
PRODUCTS
GROUP 
DS Smith Plc Annual Report 2004 1 www.dssmith-packaging.com
www.kaysersberg-packaging.com
www.stregis.co.uk
www.dssmith-plastics.com
www.spicers.net
www.johndickinson.eu.com
DS Smith Plc Annual Report 2004 3
DS Smith Plc is an international group focused 
on two major activities – Packaging and 
Ofﬁce Products.
Key ﬁgures – 2003/04 Operations Market positions
Key ﬁgures – 2003/04 Operations Market positions
Ofﬁce Products
Paper and Corrugated Packaging
The Group is developing its strong European
regional positions which are managed through
four divisions: DS Smith Packaging (UK
corrugated packaging); LINPAC Containers;
Kaysersberg Packaging (continental European
paper and corrugated packaging); St Regis
Paper Company (UK paper).
Plastic Packaging
DS Smith Plastics is growing in its two focused
markets of liquid packaging and dispensing
and industrial returnable transit packaging.
Ofﬁce Products Wholesaling
Spicers is building its position in continental
Europe based on its strong established
businesses in the UK and France.
Ofﬁce Products Manufacturing
John Dickinson is maximising returns from 
its brands and leading UK market positions 
in envelopes, books and pads. 
£748.9m turnover
50% of Group turnover
£50.5m operating proﬁt*
9.6% return on capital 
£208.7m turnover
14% of Group turnover
£15.2m operating proﬁt*
10.7% return on capital 
£498.8m turnover
33% of Group turnover
£21.7m operating proﬁt*
18.2% return on capital 
£48.0m turnover
3% of Group turnover
£1.4m operating proﬁt*
9.8% return on capital 
Produces 1.6 billion square metres per
annum of corrugated packaging at 37
factories in the UK and 13 factories in
continental Europe, located in France, 
Italy, Poland, the Czech Republic, Turkey
and the Ukraine.
Manufactures 1.2 million tonnes of paper
per annum at 6 mills in the UK, 2 mills 
in France and 1 in Turkey; 75% is
corrugated case materials (CCM) used 
for manufacturing corrugated board; 90%
is made from recycled recovered paper. 
• Number 1 UK collector and merchant 
of recovered paper
• Number 1 UK producer of corrugated
case materials
• A leading European supplier of
corrugated packaging
– Number 1 UK supplier
– Major position in France
– Growing in Italy and Eastern Europe
Liquid packaging and dispensing
incorporates bag-in-box systems and
injection moulded taps and dispensers;
products are produced at 8 locations in 
the UK, Germany, USA and New Zealand.
Industrial returnable transit packaging
includes reusable container and pallet
systems, extruded solid and multi-wall
(corrugated plastic) sheets and injection
moulded bottle crates; operations are at 
13 locations in the UK, France, Belgium,
Spain, Poland and Dominican Republic.
• Number 2 globally in liquid packaging
and dispensing
• A leading European supplier of
industrial returnable transit packaging
Wholesaling of ofﬁce products is carried
out through a network of distribution
centres: 10 in the UK; 1 in Ireland; 
6 in France; 2 in Germany; 1 in Spain; 
1 in Italy (opening November 2004). 
Its product range includes traditional
stationery lines, electronic ofﬁce supplies,
ofﬁce furniture, janitorial supplies and 
ofﬁce catering and vending provisions; 
this is communicated to its customer base 
of ofﬁce product dealers through printed
catalogues and electronic systems.
• Number 1 European ofﬁce products
wholesaler:
– Number 1 in UK
– Number 1 in France
– Developing in Germany and Spain
Its product range features leading brands: 
Basildon Bond, Black n’ Red, Cambridge,
Challenge, Lion Brand, New Guardian 
and Plus Fabric. It also supplies own 
label products and bespoke stationery.
Manufacturing operations are at 
3 UK locations.
• Leading UK positions:
– Number 1 in envelopes
– Number 1 in social stationery
– Number 1 in hard cover notebooks
GROUP OVERVIEW
Packaging
More information on our divisions can be found at:
2 DS Smith Plc Annual Report 2004
* before exceptional items and amortisation of intangibles In 2003/04, DS Smith produced a creditable
result and made important strategic progress.
Conditions remained challenging in most of
our markets and the cyclical downturn in the
paper market reduced margins significantly in
our waste-based Paper business. The Group
benefited from our continued focus on raising
operational performance with further profit
advances in Corrugated Packaging and Office
Products Wholesaling.
The acquisition of LINPAC Containers,
completed in March 2004, enlarged our
position in UK Corrugated Packaging. 
The £167 million acquisition was partly
financed by a one-for-five rights issue, which
raised £70.4 million, net of expenses. It is
disappointing that the acquisition has been
referred to the Competition Commission as
we believe that it will not lessen the vigorous
competition which marks our industry. We
are working closely with the Competition
Commission to seek to satisfy them and their
report is due towards the end of the calendar
year. In the meantime, the business is
performing well, but we are not able to
proceed with the planned integration until 
the inquiry has been completed.
The Group’s earnings per share before
exceptional items and amortisation of
intangibles was, at 16.9p, slightly better 
than last year (2002/03: 16.8p restated 
for the bonus element of the rights issue). 
Free cash flow, post dividends but before
acquisitions, of £33.1 million was marginally
ahead of last year (£32.0 million). In spite 
of the acquisition of LINPAC Containers,
gearing only increased from 42.8% 
to 48.9%.
Your Board is recommending a final dividend
of 5.6p per ordinary share which, together
with the restated interim dividend of 2.6p,
maintains the total dividend for the year, 
as restated for the rights issue, at 8.2p.
The Group continues to pursue its strategy 
of operational improvement and the
development of its two principal activities,
Packaging and Office Products Wholesaling.
We will maintain the drive to improve the
Group’s return on capital employed, which
was 11.1% in 2003/04, while investing in
capital projects and bolt-on acquisitions
which strengthen the Group’s position in 
its chosen markets. 
In December 2003, two additional Directors
were appointed. Jean-Paul Loison, Divisional
Chief Executive of the Kaysersberg
Packaging Division, responsible for all 
Paper and Corrugated Packaging operations
in continental Europe, was appointed as an
Executive Director. Christopher Bunker, 
who has been Finance Director on the 
boards of three PLCs, was appointed as 
a non-Executive Director. They both 
bring extensive and valuable experience 
to the Board.
This year’s good performance was achieved
through the skills and commitment of the
Group’s employees worldwide. I thank them
all for their continued contribution to meeting
the requirements of our customers and raising
the standards of our operations.
In the coming year we expect to make further
progress in Plastic Packaging and Office
Products Wholesaling. However, our key
paper and corrugated markets remain highly
competitive and, in the face of rising input
costs, the recent paper price rise will not be
sufficient to restore paper margins. Also as
previously indicated, for the first time for
many years there will now be a significant
charge to the profit and loss account in
respect of the UK pension scheme. Our result
will benefit from the contribution from the
LINPAC Containers acquisition but, until the
outcome of the Competition Commission
inquiry is known, we cannot start to generate
the anticipated synergies. This is likely to be
another challenging year but the Group’s
resilience in recent times gives me
confidence in our future.
Antony Hichens Chairman
CHAIRMAN’S STATEMENT
4 DS Smith Plc Annual Report 2004
In 2003/04, we produced 
a creditable result and made 
important strategic progress.
Antony Hichens Chairman CHIEF EXECUTIVE’S REVIEW
DS Smith Plc Annual Report 2004 5
Overview
From the outset, we expected 2003/04 to be 
a difficult year as margins in our important
Paper business were under pressure from
increasing competition in the paper market
and there were no signs of improvement in
the general trading environment. Our principal
objectives were to minimise the impact of the
downturn in Paper margins while continuing
to raise the results of the rest of the Group,
maintain the development of our key market
positions and generate a healthy cash flow. 
I am pleased to report a year of considerable
success against these objectives. We achieved
major profit advances in both Corrugated
Packaging, particularly in continental Europe,
and Office Products Wholesaling, which
largely offset the margin squeeze in Paper
and produced a creditable overall financial
result. We generated a strong cash surplus
after dividends but before net acquisitions.
The acquisition of LINPAC Containers
enlarged our important UK Corrugated
Packaging business. The decision by the
Office of Fair Trading to refer the acquisition
for review by the Competition Commission
means we are unable to proceed with the
planned integration into DS Smith until the
inquiry is complete. 
Group sales and operating profit before
exceptional items and amortisation of
intangibles were both 1% ahead of last 
year at £1,488.5 million and £88.8 million,
respectively. Excluding the effect of
acquisitions, disposals and foreign exchange
differences, operating profit before exceptional
items and amortisation of intangibles was 
1% lower. In the six weeks of the financial
year in which we owned LINPAC Containers,
it contributed £18.1 million of sales and 
£1.2 million of operating profit to the Group
result. Operating margin before exceptional
items and amortisation of intangibles
increased slightly to 6.0% (2002/03: 5.9%),
while return on average capital employed was
slightly lower at 11.1% (11.3%). Profit before
tax, exceptional items and amortisation of
intangibles increased slightly to £81.4 million
(£79.7 million) while adjusted earnings 
per share was also a little ahead. Interest
cover remained strong at 8.8 times.
Overall, this was a robust result, given the
weak paper market, and reflects the success
of our drive to improve and develop the
returns of the Group’s non-Paper operations.
The cash inflow after dividends but before net
acquisitions, was £33.1 million (£32.0 million).
After net expenditure on acquisitions 
of £181.6 million, principally LINPAC
Containers, and including the proceeds from
the rights issue, there was a net cash outflow
of £72.4 million which resulted in net
borrowings of £274.7 million (£202.3 million)
after the effect of exchange rate movements.
The balance sheet remains strong with
gearing at 48.9%, post the acquisition.
Packaging
In our larger activity, Packaging, which
accounted for 64% of Group sales and 74%
of operating profit before amortisation of
intangibles, demand in our principal markets
continued to be flat or declining, and margins
were under pressure, particularly in Paper.
The overall Packaging operating profit 
before exceptional items and amortisation 
of intangibles was 3% down on last year.
We achieved major proﬁt advances 
in both Corrugated Packaging and Ofﬁce
Products Wholesaling, which largely 
offset the margin squeeze in Paper. 
Tony Thorne Group Chief Executive CHIEF EXECUTIVE’S REVIEW
6 DS Smith Plc Annual Report 2004
This reflects a very significant shortfall 
in Paper, a good advance in Corrugated
Packaging, particularly on the continent, 
and a small increase in Plastic Packaging.
In Paper and Corrugated Packaging, sales
were flat while operating profit before
exceptional items and amortisation of
intangibles fell by 5%. Productivity in our
paper operations improved, but operating
profit was down sharply due to a particularly
hostile combination of lower paper prices 
and higher costs of raw material and energy.
The profit shortfall in Paper was substantially
offset by continued improvement in the
performance of our Corrugated Packaging
operations, particularly in continental Europe,
and the contribution from LINPAC Containers
in the closing weeks of the year. Paper and
box prices increased throughout Europe
towards the end of our financial year; this
provided little benefit in 2003/04. The start
point for 2004/05 was improved by these
increases but we have not been able fully 
to recover increases in input costs.
Although we made progress in Plastic
Packaging, with a 7% advance in sales 
and a 3% increase in operating profit 
before exceptional items and amortisation 
of intangibles, the improvement was less 
than in recent years. In our core businesses 
of industrial returnable transit packaging
(RTP) and liquid packaging and dispensing,
profit improved. We grew strongly in RTP
where our bottle crate business continued 
to perform well, helped by product
innovation and strong market demand. 
In liquid packaging and dispensing, the
European bag-in-box business, including 
the German Zewathener business acquired 
in 2002, traded well but the tap business 
was affected by increased competitor activity
in detergent taps. The division’s overall result
was held back by the results at two small
operations: a specialist coating business,
whose exports to Asia and the Middle East
fell in the first half of the year, and a
modified atmosphere produce packaging
business, StePac, in which we have been
investing. A programme of initiatives has
been implemented across the division to
move results forward again through driving
sales growth and raising productivity.
Ofﬁce Products
Total Office Products sales were 1% lower
but operating profit before exceptional items
and amortisation of intangibles increased by
14%. This advance in profits was despite 
the office products market across Europe
continuing to suffer from poor sales volume
and customers trading down to lower
specification products. 
In Office Products Wholesaling, which
accounted for 94% of our Office Products
sales, operating profit before amortisation of
intangibles increased by 34% to £21.7 million.
The combined profits of our developed
businesses, being Spicers UK, France and
Ireland, were well up on the previous year,
reflecting our actions to cut costs, raise
margins through better buying and improve
the product mix while maintaining service
levels. In our developing markets of Germany
and Spain we had satisfactory sales growth.
Although Spicers Germany remained in 
loss for the year as a whole, it generated 
a positive cash flow and traded at around
break-even in the second half, while Spicers
Spain made good progress against its plan. 
In Italy, preparations are well advanced for
our entry into the market during 2004/05.
In Office Products Manufacturing, operating
profit was £1.4 million (£4.0 million), this
decline against last year reflecting both the
difficult trading conditions and the sale of
Spicer Hallfield towards the end of 2002/03.
Action has been taken to reduce costs further
and to stimulate sales.
LINPAC Containers
The acquisition of LINPAC Containers on 
22 March 2004 made DS Smith the leading
corrugated packaging company in the 
UK. The net cost of the acquisition was 
£167 million, including fees for the
transaction. The acquisition improved our
market position, by broadening the Group’s
customer base, and strengthened our position
as a major buyer and seller of paper. The
business is trading well and we are pleased 
to have its high quality people and operations
within DS Smith. We remain confident 
that the synergies outlined in our circular 
are available but during the Competition
Commission inquiry period LINPAC
Containers and DS Smith Packaging will
carry on business separately; they both 
have good market positions and will 
maintain a strong focus on serving their
respective customers. 
The addition of LINPAC Containers to the
Group improved our market position in
corrugated packaging and strengthened 
our position as a major buyer and seller of
paper. It has high quality staff, an experienced
management team and well-invested facilities.
The integrated box plant at Louth, Lincolnshire
is one of the most advanced in the UK,
operating on a 24-hour, seven-day production
cycle and offering customers the combination
of low-cost, responsive and technically
advanced manufacturing. 
LINPAC Containers acquisition
Innovative manufacturing Paper reels are 
loaded onto an automated handling system which
enables faster paper changes on the corrugator. 
High productivity Technically advanced operating
systems enable the corrugator to achieve superior
output of board.  DS Smith Plc Annual Report 2004 7
Pension scheme
In accordance with SSAP 24, the 2003/04
results include a nil pension charge for the
Group’s UK defined benefit scheme as the
amortisation of the 2001 surplus largely
offsets the ongoing cost of the scheme. The
triennial valuation of the scheme is currently
taking place and the report is due in autumn
2004. Recognising that, in adverse markets,
the funding position of the scheme had
deteriorated since April 2001, the Company
resumed payments into the scheme, at the
rate of £10 million per annum, in the second
half of 2002/03. As previously indicated, the
Board expects there to be a charge to the
Group’s profit and loss account in respect 
of the scheme in 2004/05. This charge, 
under SSAP 24, will reflect the ongoing 
costs of the scheme of approximately 
£10 million and the amortisation of the
prepayments and any deficit identified by 
the SSAP 24 valuation. 
Under the FRS 17 accounting standard, which
the Company has not adopted, the scheme
had a post-tax net deficit, as at 30 April 2004,
of £54.6 million compared with a post-tax net
deficit of £93.8 million a year ago.
Strategy
We have pursued a strategy of Improve and
Develop over the last three years and this
remains in place; the objective being an
aggressive programme of raising operational
performance across the Group, while seeking
areas to develop our strong market positions
in Packaging and Office Products Wholesaling.
Return on average capital employed is a key
measure for us and our return of 11.1% 
in 2003/04 was slightly above our cost 
of capital. The commitment of capital to
existing operations will remain relatively
tight, investment being concentrated on 
new products, growth markets and major
cost-down opportunities. We will continue to
restructure or exit low performing businesses.
In Paper and Corrugated Packaging there 
is further potential to develop our European
market positions. For our established
corrugated businesses in the UK and France,
where demand is at best flat and price
pressure is intense, we have to look to
innovate on product and service while
lowering costs and increasing efficiency. 
We remain alert to bolt-on acquisitions and
green field development, concentrating on 
the faster growing markets of southern and
eastern Europe. In our UK Paper operations,
where margins have been under greater
pressure than in the past, we are developing
options to address the growing demands 
of our customers for lighter weight papers
and the need to remain internationally
competitive over the longer-term. 
In Plastic Packaging, our strategic segments
continue to present profitable growth
opportunities. In liquid packaging and
dispensing, the highest priority is to deliver
increased returns on the investment made 
in recent years. In industrial RTP, our 
strong European presence provides a base 
for further development both organically 
and through acquisitions.
Spicers is continuing to develop its position
as the leading European office products
wholesaler. Our well-established businesses
in the UK and France are focused on 
This was a robust result, given the weak
paper market, and reﬂects the success 
of our drive to improve and develop the
returns of the Group’s non-Paper operations.
re-invigorating sales growth to raise their
profitability further. In our developing
businesses, our objectives are to bring 
Spicers Germany through to good levels 
of profit, to move the Spanish business to
break-even as rapidly as possible, and to
launch successfully in Italy. We believe 
the value of Spicers is being substantially
enhanced by its continental expansion and
increasing profitability.
The Group’s resilient performance in 
2003/04 is confirmation of our strategic 
and operational progress in recent years.
We intend to build on this in the coming year.
Tony Thorne Group Chief Executive
Service capability Maintaining high service 
levels was a key contributor to Spicers’ progress.  8 DS Smith Plc Annual Report 2004
OPERATING REVIEW
The Group is developing its business in
higher growth segments of the corrugated
packaging market such as the home
delivery of products, particularly from
internet purchases. 
Focus on growth opportunities
Lower proﬁts in Paper were partly
compensated for by higher proﬁts 
in Corrugated Packaging.
Paper and Corrugated Packaging
FINANCIAL HIGHLIGHTS
2004 2003
Turnover £748.9m £747.0m
Operating proﬁt* £50.5m £53.1m
Operating margin* 6.7% 7.1%
Year end capital 
employed £657.4m £500.6m
Return on average
capital employed 9.6% 10.6%
Turnover was slightly ahead at £748.9 million
(2002/03: £747.0 million) with a fall in 
Paper being offset by higher Corrugated
Packaging sales. Operating profit before
exceptional items and amortisation of
intangibles was £50.5 million (£53.1 million)
with a significant reduction in profits from
Paper being partly compensated for by higher
profits in Corrugated Packaging, including 
a contribution of £1.2 million from LINPAC
Containers in the six weeks from the date of 
acquisition. Operating margin before
exceptional items and amortisation of
intangibles was 6.7% (7.1%) while return on
average capital employed was 9.6% (10.6%).
Market overview
Industry statistics for calendar year 2003 show
that overall demand by weight for corrugated
board in Europe grew by just 0.5%, reflecting
the sluggish economic conditions. Demand in
the UK was 0.9% lower, while France and 
*before exceptional items and amortisation 
of intangibles DS Smith Plc Annual Report 2004 9
Italy were slightly ahead by 0.7% and 1.5%,
respectively and Poland and Turkey grew
strongly by 8.3% and 11.5%, respectively*.
In the first quarter of calendar year 2004,
demand in the UK has shown a small amount
of growth while our other major markets have
performed at similar levels to 2003. Within 
the UK market for corrugated case materials
(CCM), recycled paper continued to gain
market share against virgin kraftliner and the
imported share of the market was unchanged. 
Against a background in the CCM market 
of low European demand growth and some
existing excess capacity, approximately
600,000 tonnes of new capacity became
available within the total market of
approximately 20 million tonnes. Although
this new capacity was partly offset by some
older capacity being removed, it resulted in 
a destabilisation of selling prices throughout
the European market. While no more capacity
is expected to come on stream in 2004, further
capacity additions are expected in 2005; the
effect on prices will depend upon future
market growth and the extent of any further
rationalisation of uneconomic capacity.
As a result of the soft demand and the
additional capacity, much of which is
concentrated on lightweight papers, CCM
prices fell during 2003. The resulting squeeze
on paper producers’ margins was exacerbated
by fluctuations in the cost of recovered paper,
the principal raw material for recycled CCM.
The continuing high level of demand for
recovered paper in Asia, some of which is
being supplied from Europe, is contributing
to a modest longer-term structural increase
and short-term fluctuations in the price of
recovered paper in Europe. In the UK, the net
cost of our raw material was also adversely
affected by lower demand for Packaging
Recovery Notes (PRNs), which are issued as
evidence that packaging has been reprocessed
in compliance with the UK Packaging Waste
Regulations. The government, which did not
increase recycling targets for 2003, has now
published rising targets for 2004 to 2008 in
line with the revised requirements of the EU
Packaging and Packaging Waste Directive.
There has been some firming of PRN prices 
in calendar year 2004 to date, although they
remain well below recent years’ average prices.
* Source: European Federation of Corrugated 
Board Manufacturers.
Corrugated packaging – cost effective and fully recyclable
The Group’s operations play a signiﬁcant role in the corrugated packaging recycling process. Re-use of the ﬁbres in paper packaging minimises waste disposal 
to landﬁll and reduces the need for virgin wood pulp.
2. RECOVERED PAPER
COLLECTED
Old corrugated cases and
other paper are collected from
retailers and other sources,
sorted and baled ready for
sale to paper mills. Severnside
Recycling handles around
1.3m tonnes of all grades 
of recovered paper per 
annum through its network 
of 14 depots.
1. CORRUGATED PACKAGING
DISCARDED
Consumers, retailers and other businesses
unpack products and increasingly recycle
the used packaging. In the UK, over 60%
of paper packaging is now recycled.
3. PAPER FIBRES RECYCLED 
INTO PAPER
Recovered paper is pulped and cleaned to
produce a blend of ﬁbres that is made into
reels of packaging paper (corrugated case
materials or CCM). These are cut to size and
sold to corrugated packaging plants. St Regis
Paper Company is the UK’s largest recycled
paper manufacturer.
4. PAPER CONVERTED 
INTO BOXES
CCM is converted into corrugated
board by forming the internal ﬂuting
and gluing it between outer liners.
The board is printed, cut, folded and
glued to form boxes that are sold to
processors/distributors. DS Smith
produces approximately 2.5 billion
corrugated boxes per annum.
5. BOXES FILLED 
AND DELIVERED 
Corrugated packaging is used to
store, protect and transport a
wide range of products including
fast-moving consumer goods,
consumer durables and industrial
products. 10 DS Smith Plc Annual Report 2004
OPERATING REVIEW: PAPER AND CORRUGATED PACKAGING
DS Smith Packaging
The Group’s UK Corrugated Packaging
division, DS Smith Packaging, continued 
its profit improvement despite weak demand,
industry over-capacity and price pressure.
The continuing focus on higher added value
products supported the result, which was also
assisted by the addition of the business from
three plants acquired from Macfarlane Group
in October 2003. One of these plants and 
a DS Smith sheet plant were subsequently
sold in March 2004. 
The four conventional plants, which are
operated as an integrated group to optimise
service to their customers, had mixed results.
Of these, the Fordham plant made good
progress and achieved record output levels,
but the Livingston plant suffered from
continued weak demand from Scottish
manufacturing industry.
Margins were severely squeezed at our sheet
feeding operations, which supply corrugated
DS Smith Packaging continued
its proﬁt improvement despite
weak demand, industry over-
capacity and price pressure.
OPERATING REVIEW: PAPER AND CORRUGATED PACKAGING
sheet board, due to intense competition and
industry over-supply. We have taken action 
to lower costs and raise efficiencies. The
sheet plants, which convert board into boxes,
performed steadily. 
The speciality operations advanced through
combining better efficiency with providing
their customers with product innovation and
flexible service. The Lockerbie, Belper and
Neath plants, which specialise in high quality
printed product, made encouraging progress.
The heavy duty business, Tri-Wall, performed
reasonably well given the difficulties
experienced by its industrial manufacturing
customer base.
Results in April were affected by higher
paper costs following the Europe-wide
increase in CCM prices. Corrugated prices
were increased in mid-April with a view 
to recovering increased input costs.
LINPAC Containers
LINPAC Containers, acquired on 22 March
2004, operated well during the final weeks 
of the financial year although profit in 
April was depressed by higher paper costs. 
It contributed £18.1 million of sales and 
£1.2 million of operating profit to the Group
result for the year. In late April, it raised 
its box and corrugated sheet prices in an
attempt to recover increased costs. 
Bob McLellan Chief Executive, 
DS Smith Packaging
Speciality products Paper is printed before
conversion into board to produce decorative boxes 
at DS Smith Packaging, Belper.
Adding value High quality printed packaging 
must meet the demanding requirements of leading
brand customers. DS Smith Plc Annual Report 2004 11
Kaysersberg Packaging achieved
an excellent result due to strong
progress in the French, Polish,
Italian and Turkish Corrugated
Packaging businesses.
Kaysersberg Packaging
The Group’s continental European Paper and
Corrugated Packaging division, Kaysersberg
Packaging, achieved an excellent result due to
strong progress in the French, Polish, Italian
and Turkish Corrugated Packaging businesses. 
The French paper mills increased their
productivity and sales volume, but margins
were squeezed, despite successful cost
reduction initiatives, by the fall in selling
prices and fluctuating recovered paper prices.
The French Corrugated Packaging operations
benefited from the lower paper prices, good
cost management and their focus on higher
added value products. 
In Italy, Toscana Ondulati further increased
its market share and profits with the help of
its new Lari factory, which has strengthened
its position in key market sectors.
Sales at the Polish business, DS Smith Polska,
were held back by capacity constraints, but 
profits advanced well due to focusing 
more on selling converted boxes rather 
than corrugated sheet and developing sales 
of litho-laminated and other higher value
products. A new green field factory is
planned to open in late 2005 at Kutno, 
west of Warsaw, which will allow us 
to grow our activities in Poland further. 
Action taken to raise operational performance
and increase market share enabled the
Turkish business, Copikas, to reduce its loss
substantially, despite selling prices being
under pressure.
Our associate operation in the Ukraine, 
OJSC Rubezhansk Paper and Packaging 
Mill, advanced strongly helped by a major
programme of investment. In December 
2003 the business secured a $14 million 
loan from the European Bank for
Reconstruction and Development to help
finance further growth.
Italy Toscana Ondulati has beneﬁted from recent
major investment. It supplies high quality boxes for
the wine industry and other market sectors.
Poland Expansion of local industry and retail
distribution is increasing the demand for higher
value corrugated packaging at DS Smith Polska.
Jean-Paul Loison Chief Executive, 
Kaysersberg Packaging
Growth opportunities 12 DS Smith Plc Annual Report 2004
Proﬁts were substantially 
below those of the previous
year due to a combination 
of lower selling prices, the
ﬂuctuating cost of recovered
paper, higher energy costs 
and lower PRN prices.
Don Coates Chief Executive, St Regis Paper
warehousing. The other paper mills also
raised volumes, and record production was
achieved at Sudbrook and Taplow.
The Severnside collection and recycling
business continued to expand, although
results were affected by fluctuations in the
price of recovered paper. It invested further 
in its collection infrastructure, both in terms
of equipment and collection depots. It added
one new depot during the year and, since the
year end, has acquired the five depots of BPB
Recycling, subject to approval from the
Office of Fair Trading. 
Severnside Recycling continues to develop
its collection of recovered paper from a
wide range of businesses including major
supermarket chains. It offers a one-stop-
shop solution for managing companies’
entire recycling and waste disposal needs.
In tough market conditions, St Regis 
raised its paper output and sales through
increased machine efﬁciency. Nearly 
30% of sales were exported, mainly 
to continental Europe.
OPERATING REVIEW: PAPER AND CORRUGATED PACKAGING
St Regis Paper Company
St Regis increased its production and sales
volumes through continuing emphasis on
higher efficiency and improved process
control. Sales to the UK market increased
slightly, while exports moved ahead more
strongly, assisted in the early months of 
the year by the strengthening of the euro
against sterling. Profits were substantially
below those of the previous year due to 
a combination of lower selling prices, the
fluctuating cost of recovered paper, higher
energy costs and lower PRN prices. 
The Kemsley paper mill, which accounts 
for over 50% of St Regis’ paper production,
achieved record output, with machine
efficiencies well above the previous year 
due to continuing process optimisation. 
A new warehouse was commissioned in 
autumn 2003, which improved customer
service and reduced costs by virtually
eliminating the use of third party
Operational progress DS Smith Plc Annual Report 2004 13
Sales and proﬁts advanced 
well in returnable transit
packaging.
Adrian Whitﬁeld Chief Executive, 
DS Smith Plastics
Plastic Packaging
Worldwide Dispensers is one of the 
world’s leading manufacturers of high
quality injection moulded taps and
dispensing ﬁtments.
2004 2003
Turnover £208.7m £195.0m
Operating proﬁt* £15.2m £14.7m
Operating margin* 7.3% 7.5%
Year end capital 
employed £136.5m £136.0m
Return on average
capital employed 10.7% 11.5%
A leader in dispensing
FINANCIAL HIGHLIGHTS
*before amortisation of intangibles
DS Smith Plastics’ turnover grew by 7% 
to £208.7 million. Operating profit before
amortisation of intangibles was 3% ahead 
at £15.2 million and operating margin before
amortisation of intangibles was 7.3% (7.5%).
Return on average capital employed was 10.7%
(11.5%). The division made profit progress 
in its two principal business sectors, liquid
packaging and dispensing and returnable
transit packaging (RTP), but its overall
performance was held back by the results 
of two small operations. Polymer prices 
had no significant impact on results during
the year as a whole. 
Sales and profits advanced well in RTP
principally due to a strong performance in
injection moulded bottle crates. Increased
crate demand from the brewing sector was
stimulated by product innovation and new
We made proﬁt progress in our two principal
business sectors but the division’s overall
performance was held back by the results 
of two small operations. 14 DS Smith Plc Annual Report 2004
OPERATING REVIEW: PLASTIC PACKAGING
Bag-in-box packaging – meeting customers’ needs worldwide
DS Smith supplies all elements of bag-in-box packaging and systems. Customers in Europe, the USA and
Asia-Paciﬁc select from our total offering to achieve the optimal liquid packaging solution for their product.
Usage of bag-in-box packaging is growing for a wide range of liquids, including fruit juice, dairy
products, wine, soft drinks and water.
DW Plastics produces custom designed and
engineered crates to suit each customer’s needs
and brand image. Products include innovations
such as in-mould labelling and soft touch handles.
Advanced crate technology
environmental regulations in Germany which
encourage the use of returnable bottles.
Demand for other RTP products was patchy,
but action to control costs and improve
efficiency benefited the results.
In liquid packaging and dispensing, the bag-
in-box business in Europe performed well,
assisted by the Zewathener business in
Germany acquired in 2002. Margins were
affected by the particularly strong growth 
in the relatively lower margin wine bag
business. Tap sales and margins were 
affected by increased competitor activity 
in detergent taps. Action has been taken to
increase the rate of profit growth by focusing
on driving sales, cost reduction and
productivity improvements.
Of the two smaller businesses that impacted
the overall result, our specialist coating
business suffered a reduction in exports to
Asia and the Middle East due to SARS and
the Iraq War; costs have been cut and sales
are being rebuilt. The other is a developing
business, StePac, which specialises in
modified atmosphere packaging for preserving
the quality of fresh fruit and vegetables 
in transit; we have invested to develop the
business and are focused on growing sales. 
BESPOKE FILLING
SYSTEMS 
Customised machines 
for aseptic or non-aseptic
ﬁlling of bags.
COMPREHENSIVE 
RANGE OF BOXES
Designed and manufactured
to provide high shelf impact
for consumer products or
strong efﬁcient solutions for
industrial use.
HIGH QUALITY TAPS AND
DISPENSING FITMENTS 
Including taps, caps, bungs, valves
and tube connectors to dispensing
machines. All taps are leak tested.
MADE-TO-MEASURE
PLASTIC BAGS
Produced from a range of
plastic materials – single and
multi-layer – with capacities
from 1 litre to 1,000 litres.
Each bag is ﬁtted with a
plastic gland for ﬁlling and 
to hold the tap or other
dispensing ﬁtment. DS Smith Plc Annual Report 2004 15
Spicers’ substantial advance in proﬁt 
was achieved against a background of
continuing soft demand for traditional 
ofﬁce products across Europe.
Ofﬁce Products Wholesaling
Spicers’ sales increased by 1% to £498.8 million
with higher sales in Germany and Spain being
partly offset by declines elsewhere in Europe.
Operating profit before amortisation of
intangibles increased by 34% to £21.7 million
and operating margin before amortisation 
of intangibles increased from 3.3% to 4.4%.
Return on average capital employed advanced
from 12.7% to 18.2%.
Spicers’ substantial advance in profit was
achieved against a background of continuing
soft demand for traditional office products
across Europe, with consumers being more
inclined to buy lower specification, or own-
brand products. There is growing evidence, 
in most markets, of confidence recovering and
consumption stabilising. Demand for electronic
office supplies (EOS) continues to grow but
the low margins on the highest volume EOS
products have deteriorated further. 
Spicers’ improvement in profitability was
principally attributable to further strong
progress in the UK as a result of the
programme of operational initiatives started 
in 2002. Service levels to customers were
raised further and significant cost reductions
FINANCIAL HIGHLIGHTS
2004 2003
Turnover £498.8m £495.6m
Operating proﬁt* £21.7m £16.2m
Operating margin* 4.4% 3.3%
Year end capital 
employed £123.7m £122.3m
Return on average 
capital employed 18.2% 12.7%
Products backed by service
Spicers’ improvement in
proﬁtability was principally
attributable to further strong
progress in the UK.
Bill Armstrong Chief Executive, Spicers
Spicers’ UK catalogue was developed
after extensive consumer market research.
Redesigned for clarity, it groups the
18,000 product lines in easy-to-use
sections.
*before amortisation of intangibles OPERATING REVIEW: OFFICE PRODUCTS WHOLESALING
16 DS Smith Plc Annual Report 2004
The Spanish business, launched in 2002,
achieved strong sales growth in the year and a
highly successful sell-in of the 2004 catalogue
augurs well for a further major advance in
sales in the year ahead. Spicers’ new Italian
business will be launched in November 2004.
The purpose-built head office and first RDC 
at Castel San Giovanni, just south of Milan, 
is now occupied and intense preparation is
underway to ensure a successful start-up.
Leading brand Spicers’ 5 Star range of over
1,400 essential ofﬁce products is backed with 
an extensive marketing programme.
achieved. The regional distribution centre
(RDC) network was restructured with the
closure of the Nottingham RDC. 
In France, market conditions proved
particularly challenging but Spicers’ business
improved its profitability by cutting costs and
managing its margins better. Spicers Germany
grew steadily throughout the year and
generated a positive cash flow. Results in 
the first half were substantially affected by 
a limited number of bad debts but it traded 
at around break-even in the second half.
Spicers – service is key
Spicers’ eight UK regional distribution centres provide fast, efﬁcient delivery to their customer base of ofﬁce products dealers. They offer same-day delivery or an
overnight, next-day service. Orders received before 7.00 pm will be fulﬁlled to reach the dealer in time for them to deliver the goods to their customer the following
morning. Over 95% of orders are delivered on time and in full.
CUSTOMER SERVICE EXCELLENCE
Orders are received from customers by telephone
or on-line through SPICERlinkWeb. The customer
services team responds promptly and ﬂexibly to
dealer enquiries and requests. 
PRECISE ORDER FULFILMENT
Picking accuracy and quality of delivery
are measured to ensure high service
standards are maintained.
GOODS IN
700 product lines are delivered
per day from Spicers’ central
distribution centre.
14,000+ PRODUCT 
LINES IN STOCK
Stock levels of Spicers’ own 5 Star
brand and other branded products
are closely managed to maintain
high order fulﬁlment levels.
FOCUS ON CUSTOMER
SATISFACTION
Over 10,000 product lines are
picked each day to satisfy customer
orders. Peak time for processing
orders is 6.00 pm – 11.00 pm.
GOODS OUT
Peak time for order despatch to
dealer customers is 4.00 am to
reach them before 9.00 am. DS Smith Plc Annual Report 2004 17
particularly for branded products, while
imports continue to exert pressure on prices.
Growth was achieved in envelopes for direct
and transactional mail, while the Black n’
Red brand advanced well, with encouraging
signs for its development in the US market.
Action has been taken to strengthen the
division’s marketing and sales activity. Costs
have been further reduced in production and
by management structure rationalisation. 
John Dickinson’s sales were £48.0 million
(£59.7 million) and operating profit was 
£1.4 million (£4.0 million); the previous
year’s result included sales of £6.3 million
and operating profit of £0.6 million from the
Spicer Hallfield business which was sold in
February 2003. Operating margin was 2.9%
(6.7%) and return on average capital
employed was 9.8% (23.1%).
Sales volumes were significantly lower,
Ofﬁce Products Manufacturing
Growth opportunity Latest technology is used 
to produce quality printed envelopes for direct mail 
and other uses where corporate image is important.
Smart products Black n’ Red’s Digital Notebook
used with a digital pen enables text and sketches 
to be quickly downloaded to a PC.
John Dickinson’s top stationery brands
offer quality, style and innovation. 
Black n’ Red’s brand awareness and 
sales have increased in continental 
Europe and the USA.
Powerful brands
2004 2003
Turnover £48.0m £59.7m
Operating proﬁt £1.4m £4.0m
Operating margin 2.9% 6.7%
Year end capital 
employed £13.7m £13.8m
Return on average 
capital employed 9.8% 23.1%
FINANCIAL HIGHLIGHTS
Sales volumes were
signiﬁcantly lower, 
particularly for 
branded products.
Richard Evans Chief Executive, John Dickinson FINANCIAL REVIEW
18 DS Smith Plc Annual Report 2004
Group trading results
The Group’s trading results are summarised
in table 1 opposite.
Turnover in the financial year ended 30 April
2004 increased by 0.6% over the previous year.
Turnover was 0.5% ahead in the first half of
2003/04 versus the same period in 2002/03.
In the second half the rate of growth increased
slightly to 0.8%. Excluding the impact of
acquisitions, disposals and foreign exchange
differences, turnover was 1.8% down on the
previous year; the first half of the year was
down by 2.1% and the second half by 1.7%,
mainly reflecting the pricing pressures within
the UK markets. LINPAC Containers’
contribution to Group turnover from the date of
acquisition (22 March 2004) was £18.1 million. 
Operating profit, before exceptional items
and amortisation of intangibles, increased by 
0.9% in 2003/04 from £88.0 million to £88.8
million. Excluding the impact of acquisitions,
disposals and foreign exchange differences, 
operating profit before exceptional items and
amortisation of intangibles fell by 1.0%.
LINPAC Containers contributed £1.2 million
from the date of acquisition. Group operating
profit for the first half of the year was 10.5%
below the same period last year, while that 
in the second half was up 15.0%. The 
second half increase was mainly due to
Office Products Wholesaling, which, for 
the whole year, increased operating profit 
before amortisation of intangibles from 
£16.2 million to £21.7 million on flat sales.
This increase reflects a combination of
improved buying margins and the continued
drive to reduce costs, particularly in the UK.
Return on sales for the year improved slightly
from 5.9% in 2002/03 to 6.0%. The return 
on sales for the second half of the year was
6.1%, compared with 5.8% in the first half.
The Group’s return on capital employed
(defined as the period’s annualised adjusted
operating profit divided by the average 
We continue to focus on raising 
our return on capital employed 
while generating free cash ﬂow to 
cover the dividend well and fund 
bolt-on acquisitions.
Gavin Morris Group Finance Director
 
2000
1
2
3
4
5
7
6
8
2001 2002 2003 2004
RETURN ON SALES* (%)
5.6
6.1
5.0
5.9
6.0
 
2000
2
4
6
8
10
12
2001 2002 2003 2004
RETURN ON CAPITAL EMPLOYED* (%)
9.8
11.4
9.2
11.3
11.1
* before exceptional items and amortisation 
of intangibles
* before exceptional items and amortisation 
of intangibles DS Smith Plc Annual Report 2004 19
month end capital employed in the period)
fell slightly from 11.3% to 11.1%, mainly
reflecting the higher average capital
employed. The measure for the second half 
of the year was 11.2% (2002/03: 10.1%).
Although the UK still accounts for the
majority of the Group’s turnover and
operating profit, the proportion of turnover
originating from the Group’s overseas
businesses rose from 41% in 2002/03 to 44%
in 2003/04 while that of operating profit rose
from 32% to 47%. The latter was mainly due
to improvements in the continental European
Corrugated businesses. In constant currency
terms, the turnover of overseas subsidiaries
grew by 2.6% and, after adjusting for the
impact of acquisitions and disposals, by
3.1%. Sales in the UK fell by 4.2% and, after
excluding acquisitions and disposals, by 5.3%.
The major exchange rates used to translate the
Group’s results are shown in table 2 above.
The trading results are described more fully 
in the Chairman’s Statement, Chief
Executive’s Review and Operating Review.
Group proﬁt and loss account
The Group’s 2003/04 results include 
£3.0 million as the Group’s share of
associated undertakings’ operating profit, 
an increase of £0.4 million on last year. This
relates to OJSC Rubezhansk, the Group’s
39% owned paper and packaging company 
in the Ukraine, which saw increased sales.
The net interest expense for the year decreased
from £10.9 million to £10.4 million, benefiting
from slightly lower average borrowings and
lower euro interest rates, partly offset by
higher sterling interest rates. The additional
borrowings resulting from the acquisition 
of LINPAC Containers on 22 March 2004,
net of the rights issue proceeds, had only 
a small effect in the year. The interest charge
was impacted by a £0.2m (2002/03: £1.6m)
net monetary gain arising as a result of
hyperinflationary accounting for the Group’s
Turkish business. Group interest cover
remains strong at 8.8 times.
The Group’s effective tax rate, excluding
exceptional items and the amortisation of
intangibles, was 27%, the same as last year.
The rate continued to be below the UK and
the higher overseas corporate tax rates due to
the use of tax losses and the benefit arising
from funding structures. This rate is expected
to increase in the coming year as a result of
changes in the mix of profits and as historic
tax losses carried forward are fully utilised.
Earnings per share before exceptional items
and amortisation of intangibles increased 
0.1p to 16.9p. The prior year earnings per
share figures have been restated to take into
account the bonus element in the rights issue
by multiplying by a factor of 0.933. On 
an FRS 3 basis, earnings per share were
15.9p. The proposed final dividend is 5.6p
per ordinary share, which together with the
Full year Second half
2003/04 2002/03 2003/04 2002/03
£m £m £m £m
Turnover 1,488.5 1,479.0 743.8 737.9
Operating proﬁt* 88.8 88.0 45.3 39.4
Return on sales* 6.0% 5.9% 6.1% 5.3%
Return on capital employed* 11.1% 11.3% 11.2% 10.1%
2003/04 2002/03
Principal currency exchange rates Average Year end Average Year end
Euro 1.44 1.48 1.54 1.43
United States Dollars 1.71 1.77 1.56 1.60
Polish Zloty 6.62 7.13 6.25 6.08
TABLE 1
TABLE 2
*before exceptional items and amortisation of intangibles 20 DS Smith Plc Annual Report 2004
FINANCIAL REVIEW
restated interim dividend of 2.6p, maintains
the total dividend for the year, as restated for
the rights issue, at 8.2p. The total dividend to
be paid for the year is 8.4p. Dividend cover
before exceptional items and amortisation 
of intangibles fell from 2.0 times to 1.9 times.
Free cash flow covered the dividend 
2.2 times (2002/03: 2.1 times).
Cash ﬂow
Free cash flow, which is defined as the net
cash flow before dividends, acquisitions and
disposals, is summarised below:
2003/04 2002/03
£m £m
Operating proﬁt 88.8 88.0
Depreciation 64.5 62.2
Working capital (7.0) (1.0)
UK pension scheme 
contributions (10.0) (5.0)
Other (4.5) (2.2)
Cash ﬂow from 
operating activities 131.8 142.0
Capital expenditure 
payments (51.7) (63.4)
Sale of ﬁxed assets 9.1 4.2
Interest (10.0) (7.5)
Taxation (17.9) (15.1)
Free cash ﬂow 61.3 60.2
Cash flow from operating activities was
£131.8 million, £10.2 million below last year,
primarily as a result of the increase in working
capital and an additional £5.0 million cash
contribution to the UK Group pension scheme. 
During the year, the Group made a further
£10.0 million contribution to its main UK
defined benefit pension scheme making a
total of £15.0 million paid into the scheme
over the past two years. 
Capital expenditure amounted to £49.8 million,
£14.7 million below depreciation. The impact
on cash flow was £51.7 million as a result 
of a slight decrease in capital expenditure
creditors from last year’s level. 
Tax payments in the year were £17.9 million,
lower than the tax charge for the year as 
a result of timing differences.
The cash inflow after dividends but before
net acquisitions was up 3% at £33.1 million,
and the net cash outflow for the year before
financing was £147.8 million, as shown below:
2003/04 2002/03
£m £m
Free cash ﬂow 61.3 60.2
Dividends (28.2) (28.2)
Free cash ﬂow before 
net acquisitions 33.1 32.0
Net acquisitions (181.6) (16.1)
Investments 0.7 (0.3)
Net cash ﬂow (147.8) 15.6
The net cash outflow on acquisitions and
disposals in the year was primarily the
consideration and costs, net of acquired cash,
for LINPAC Containers of £166.8 million. 
UK Group pension scheme
The Group operates a defined benefit scheme
in the UK which at the last financial valuation
in 2001 was in surplus. The Group’s SSAP 24
profit and loss charge for 2003/04 for this
scheme was nil as the annual cost of
providing benefits was offset by the
 
2000
25
50
75
100
200
125
150
175
2001 2002 2003 2004
CASH INFLOW FROM 
OPERATING ACTIVITIES (£ MILLION)
94.7
98.6
178.0
142.0
131.8
 
2000
10
20
30
40
50
2001 2002 2003 2004
GEARING (%)
38.3
43.3
44.6
42.8
48.9
amortisation of the 2001 surplus. The next
triennial valuation of the scheme is underway
as at 5 April 2004, and the results of this
formal valuation should be known by the
autumn. It is anticipated that the valuation
will show the scheme to be in deficit. As a
result, there will be a charge to the Group’s
profit and loss account in respect of the scheme
in 2004/05. This charge, under SSAP 24, will
reflect the ongoing costs of the scheme of
approximately £10 million, the amortisation
of the £15.0 million prepayments into the
scheme amounting to circa £1.5 million per
year, and the amortisation of any deficit
identified by the valuation. Recognising that
the funding of the scheme had deteriorated,
the Group recommenced contributions into
the scheme in the second half of 2002/03 
at an annual rate of £10 million; these now
total £15 million and are accounted for as
prepayments on the balance sheet.
Financial position
Shareholders’ funds totalled £562.0 million 
at the end of the year, up from £472.9 million
at the end of 2002/03. The retained profit for
the year was £24.6 million, while changes 
in exchange rates had the effect of reducing
shareholders’ funds by £7.7 million. A total 
of 64.5 million new ordinary shares were
issued following the one-for-five rights issue
in March 2004 in relation to the acquisition
of LINPAC Containers. These shares were
fully subscribed, resulting in total proceeds
on issue of £70.4 million (net of expenses of
£1.9 million). Net assets per share were 145p
(137p) or 189p if goodwill written off to
reserves is added back (185p). DS Smith Plc Annual Report 2004 21
The Group’s closing net borrowings were
£274.7 million, an increase of £72.4 million
in the year, as shown below:
2003/04 2002/03
£m £m
Net cash ﬂow (147.8) 15.6
Shares issued 74.1 0.3
Rights issue costs (1.9) –
Net borrowings acquired (0.5) (2.0)
Exchange differences 3.7 (20.3)
Net borrowings movement (72.4) (6.4)
Opening net borrowings (202.3) (195.9)
Closing net borrowings (274.7) (202.3)
Gearing increased from 42.8% to 48.9%
while interest cover remained strong at 
8.8 times (8.3 times); the ratio of net debt 
to EBITDA was 1.8 times (1.3 times).
Treasury management
The Group treasury strategy is controlled
through a Treasury Committee, which meets
regularly and includes the Chairman, the
Group Chief Executive and the Group Finance
Director. The Group Treasury function operates
in accordance with documented policies and
procedures approved by the Board and
controlled by the Group Treasurer. The
function arranges funding for the Group,
provides a service to operations and
implements strategies for interest rate and
foreign exchange exposure management.
At the year end the Group’s committed
facilities were £498 million. Uncommitted
facilities including overdrafts totalled 
£120 million. The total gross borrowings
drawn under all these facilities at the year end
were £336.3 million. The current weighted
average maturity of the Group’s committed
facilities is 4.7 years (5.7 years).
The major treasury risks to which the Group
is exposed relate to movements in interest
rates and currencies. The overall objective 
of the Treasury function is to control these
exposures whilst striking an appropriate
balance between minimising risks and costs.
Financial instruments and derivatives may 
be used in implementing hedging strategies,
but no speculative use of derivatives or other
instruments is permitted.
The Treasury Committee regularly reviews 
the Group’s exposure to interest rates and
considers whether to borrow on fixed or
floating terms. For the last few years the
Group has generally chosen to borrow on
floating rates, which the Committee believes
have provided better value. During the year,
however, the Group took advantage of the
historically low level of medium to long-term
sterling interest rates and fixed the interest 
rate on £40 million of sterling denominated
borrowings for a period of five years at an
average rate (before margin) of just under 4%.
Group policy is to hedge the net assets of
major overseas subsidiaries by means of
borrowings in the same currency to a level
determined by the Treasury Committee. The
borrowings in currency give rise to exchange
differences on translation into sterling, which
are taken to reserves. A portion of the Group’s
net borrowings are denominated in euros,
which are held to hedge the underlying assets
of our eurozone operations. At the year end,
these borrowings represented 64% of our
eurozone net assets.
International accounting standards
The Council of the European Union announced
in June 2002 that listed companies in Europe
will be required to adopt International
Financial Reporting Standards (IFRS) and
International Accounting Standards (IAS) 
in the preparation of Financial Statements 
for accounting periods beginning on or after
1 January 2005. The adoption of IFRS will 
be first reflected in the Group’s financial
statements for the half year ending 31 October
2005 and the year ending 30 April 2006. 
Our project to manage the transition of
financial reporting from UK GAAP to
international accounting has completed initial
assessments of the differences between UK
GAAP and IFRS. The exercise indicates that
the major areas of impact on our net profit
and shareholders’ funds will be the accounting
for share-based payments, amortisation of
intangible assets, deferred tax and pensions. 
Gavin Morris Group Finance Director
23 June 2004
 
2000
5
10
15
20
2001 2002 2003 2004
EARNINGS PER SHARE*
+
 (PENCE)
12.5
14.1
13.1
16.8
16.9
 
2000
2
4
6
8
10
2001 2002 2003 2004
DIVIDENDS PER SHARE
+
 (PENCE)
7.9
8.2
8.2
8.2
8.2
* before exceptional items and amortisation 
of intangibles
+ restated for bonus element of the rights issue
+ restated for bonus element of the rights issue 22 DS Smith Plc Annual Report 2004
DIRECTORS AND COMPANY SECRETARY
Antony Hichens 
† +
Chairman 
Appointed to the Board on 
29 June 1999 as a non-
Executive Director, became
Chairman of the Board on 
8 September 1999 and is
Chairman of the Nomination
Committee. He is a Member 
of the Takeover Panel, a
Director of WaterRower (UK)
Limited and is also a non-
Executive Director of Candover
Investments PLC and The JP
Morgan Fleming Income and
Capital Investment Trust plc.
Previously, he held the positions
of a Managing Director and
Chief Financial Ofﬁcer of
Consolidated Gold Fields,
Chairman of Caradon plc 
and Chairman of Lasmo plc.
Age 67.
Tony Thorne 
§ +
Group Chief Executive
Appointed to the Board on 
1 January 2001 as Chief
Operating Ofﬁcer and became
Group Chief Executive on 
5 December 2001. He was
previously President of SCA
Packaging’s Corrugated
Business Division and prior to
that held senior management
positions in Shell. Age 53. 
Gavin Morris 
§
Group Finance Director 
Appointed to the Board on 
5 November 2002 as Group
Finance Director. He was
previously Chief Financial
Ofﬁcer of Citex Group and
prior to that held Chief
Financial Ofﬁcer positions at
Philips Lighting Holding BV,
Ionica Group plc, Alfred
McAlpine Plc and Norcros Plc.
Age 50. 
Bob Beeston 
† + 
*
#
Appointed to the Board on 
5 December 2000 as a non-
Executive Director. He is
Chairman of the Remuneration
Committee and is the Senior
Independent Director. He is
also Chairman of Cookson
Group plc and was previously
Chief Executive of FKI plc. 
Age 62. 
Richard Marton 
† * #
Appointed to the Board on 
13 March 2000 as a non-
Executive Director. He was
previously Chief Executive 
and then non-Executive
Director of Britax International
plc. Age 63. 
Daniel Piette 
† *
Appointed to the Board on 
1 October 1993 as a non-
Executive Director. He is
Group Executive Vice-President
and a member of the 
Executive Committee of LVMH
Corporation, Chairman and
Chief Executive Ofﬁcer of LV
Capital and President of 
L Capital. Age 58. 
Carolyn Cattermole
Appointed Company Secretary
on 20 November 2000. She
was previously Company
Secretary of Courtaulds
Textiles plc and prior to that
was a senior legal adviser
with Courtaulds plc having
qualiﬁed as a solicitor with
Norton Rose. Age 43.
Jean-Paul Loison
Appointed to the Board on 
9 December 2003. He is
Divisional Chief Executive of
the Kaysersberg Packaging
division of the Group, with
responsibility for the Group’s
continental European Paper
and Corrugated Packaging
operations. He joined
Kaysersberg Packaging S.A.S.
in 1970 and held various
senior management positions
before becoming Divisional
Chief Executive in 1993. 
Age 62. 
Christopher Bunker 
† * #
Appointed to the Board on 
9 December 2003 as a non-
Executive Director. He recently
retired as Finance Director of
the Water Division of RWE AG
and was previously Group
Finance Director of Thames
Water Plc. Prior to that he 
was Group Finance Director 
of Tarmac Plc, Commercial
Director of GKN Aerospace
and Defence and Finance
Director of Westland Group
Plc. He is a non-Executive
Director of John Mowlem Plc
and of Travis Perkins plc. 
Age 57. 
Peter Johnson 
† * #
Appointed to the Board on 
8 December 1999 as a 
non-Executive Director and 
is Chairman of the Audit
Committee. He is Chief
Executive of George Wimpey
Plc and a Member of the
Council for Industry and
Higher Education and was
previously Chief Executive 
of The Rugby Group PLC. 
Age 56. 
† Non-Executive Director
§ Member of General Purposes Committee
+ Member of Nomination Committee
* Member of Remuneration Committee
# Member of Audit Committee DS Smith Plc Annual Report 2004 23
CORPORATE SOCIAL RESPONSIBILITY REVIEW
The Board recognises that if the Group is to
have long-term success and produce good
sustainable returns for its shareholders, it
must maintain high standards of ethical and
social behaviour in all its business dealings.
The Group’s Key Corporate Values statement
defines the conduct required of all employees
at all times, being: to act ethically and with
integrity; to treat their colleagues fairly,
equitably and with respect; to work safely;
and to protect the environment. These values
are underpinned by more detailed policies on
health and safety, the environment, workplace
malpractice and other topics. The Group
Chief Executive is the Director responsible
for corporate social responsibility matters and
reports to the Board on these.
Safety and the environment continue to be
the highest priority areas of corporate social
responsibility on which the Group is focused.
Health and safety
It is essential to the Group’s successful
performance that we provide a safe working
environment for everyone on our premises
and that all reasonable precautions are taken
to ensure that work is always carried out safely.
All the Group’s businesses have adopted
common definitions and reporting methods,
and progress is monitored monthly. Information
is reported to the Board quarterly and, as an
indication of its importance, safety is a fixed
agenda item at all divisional review meetings.
In 2003/04 the Group’s accident frequency
rate increased by 2% but the severity rate 
was 3% lower, reflecting a lower incidence 
of serious accidents. There is scope to reduce
minimising the impact of our operations 
on the environment, in accordance with 
the Group Environment Policy. Divisional
performance and activities are reviewed at
the Group Environment Committee, which
meets three times per year and is chaired 
by the Group Chief Executive.
During the year we accelerated our programme
to establish an appropriate environmental
management system (EMS) at all sites. 
33 Group sites have now been identified as
having higher potential environmental impact
due to their size or type of operations. 16 of
these sites are certified for the internationally
recognised ISO 14001 EMS; during 2003/04,
Abbey Board, St Regis Kemsley mill and
DW Plastics, Bilzen obtained certification.
The 17 other higher potential impact sites are
all progressing towards achieving ISO 14001
certification; 16 are on course to be certified
during 2004/05. Of the Group’s 73 other 
sites, 35 have a simplified EMS in place,
appropriate to their lower level of potential
environmental impact, and many more are 
on course for implementation of a simplified
EMS during 2004/05.
The Group’s paper mills and some other
major sites have monitored key environmental
performance data for some years. From early
2003 all Group businesses started monitoring
and reporting on energy usage, carbon
dioxide (CO2) emissions, water usage, waste
disposed of to landfill and waste recycled. 
As comparable data builds up in future years
this will enable the Group to report more fully
on its overall environmental performance.
The EMSs and environmental reporting of
A ﬂow of small and large initiatives within the
Group’s businesses contributes to minimising
our impact on the environment.
Projects are often employee-driven and focus
on reducing energy consumption, water and
chemical usage and waste.
Environmental improvement
both the frequency and severity of accidents
and, in the coming year, the Group is
undertaking further initiatives aimed at
reducing specific types of accidents.
A number of steps were taken during 2003/04
to reinforce the drive to reduce accidents. 
A Group Health and Safety Committee was
established to enable divisions to share best
practice and experience more readily. A new
accident investigation procedure ensures that
accidents receive the appropriate level of
management attention and systems have 
been improved to enable lessons learned 
from accidents to be quickly shared across
the Group. In the UK, divisions continue 
to collaborate with the trade unions and the
Health and Safety Executive (HSE) to raise
standards and St Regis has participated in
joint training courses for HSE inspectors.
Over 80 DS Smith Packaging managers 
were trained and accredited to the Institute 
of Occupational Safety and Health standards
during 2003/04. St Regis Taplow mill was
awarded the UK paper industry’s leading
safety award in recognition of its sustained
action programme on health and safety and
its extended period without a lost time accident.
Kaysersberg Packaging’s St Just plant was
accredited for the OHSAS 18801 international
health and safety management system and
other plants in France, Poland and Turkey are
working towards obtaining accreditation.
Environment
In 2003/04, the Group made further
substantial progress in strengthening its
environmental management and reporting.
Divisional management is responsible for
Recycling Glue drums that were previously disposed 
of to landﬁll are now collected and returned to the
manufacturer for recycling.
Lower resource usage Investment in a new
shrink-wrapper substantially reduced ﬁlm usage
while lowering energy consumption. In addition to the Group’s activities in
collecting recovered paper for recycling in
paper manufacturing, our businesses look
to recycle their process waste and other
resources whenever possible.
Offcuts of corrugated board from the 
box manufacturing process are fed,
through tubes, straight from the cutting
machines to be baled and then recycled 
to our paper mills. 
Increased recycling 
CORPORATE SOCIAL RESPONSIBILITY REVIEW
24 DS Smith Plc Annual Report 2004
sites are audited through the Group’s routine
internal audit processes.
The Group had a number of minor
environmental incidents during the year,
following which corrective action was taken
promptly and the appropriate agencies were
informed, where necessary. At DS Smith
Packaging Clay Cross, a discharge of ink
waste into an adjacent stream, caused by the
failure of a valve, resulted in prosecution 
and a £3,000 fine. As part of our continuing
drive to reduce such incidents, investigation
results and lessons learnt from environmental
incidents are communicated throughout 
the Group.
A large proportion of the Group’s businesses
now have processes in place for assessing
their suppliers’ environmental policies and
management systems.
Packaging and the environment
Packaging performs the valuable functions 
of limiting damage to products, reducing
waste and lowering the total cost of goods.
The Group’s packaging operations contribute
to minimising the use of resources by
working with their customers to develop
packaging of the optimum specification 
for the required use. The sales and design
teams at a number of our UK and continental
European packaging businesses are evaluating
opportunities for making environmentally
beneficial improvements to customers’
products through switching to recycled paper,
reducing packaging weight and minimising
waste through creative design. 
The Group makes a major contribution to
reducing waste disposal in landfill through
the recycling process of its Paper and
Corrugated Packaging operations. Corrugated
board is produced predominantly from
recycled paper and is a cost-effective and
fully recyclable packaging material.
Severnside Recycling is the UK’s largest
collector of recovered paper; it works closely
with a number of major supermarket chains
to raise recycling levels and continues to
invest in its collection infrastructure. St Regis
is the UK’s leading recycler of packaging
waste and largest producer of recycled paper,
while Kaysersberg is a significant recycler of
recovered paper in France.
During the year, revisions were made to 
both the EU Packaging and Packaging 
Waste Directive and the UK Packaging Waste
Regulations. The EU has set material specific
targets for the recovery and recycling of
packaging from 2004 to 2008. The UK
government has consequently set similar
material specific targets for the same period.
Recycling of paper packaging under the UK
Regulations is targeted to rise from 65% 
in 2004 to 70% in 2008. The Group’s paper
collection and recycling operations are
expected to make a key contribution to 
the achievement of these targets. 
The Group’s plastic returnable transit
packaging is designed to be re-used, often
many times, where customers require multi-
trip packaging. Several of our businesses
recycle worn or damaged plastic packaging,
such as bottle crates or layer pads, to produce
new crates or plastic sheet.
Environmental management
Paper
Paper manufacturing has the largest potential
environmental impact of all the Group’s
operations. Six of the Group’s nine paper mills
have ISO 14001 certification and the other
three are progressing towards certification.
The UK mills are regulated through Pollution
Prevention and Control (PPC) permits under
which they each have specific improvement
programmes and targets. St Regis’ overall
compliance with its PPC emission targets 
fell slightly to 98.9% compared with 99.7%
in the previous year, principally due to
several small overflows of effluent at the
pumping station on the Kemsley site; 
a project to eliminate these overflows is 
due for completion in August 2004. 
St Regis is a key participant in the UK paper
sector Climate Change Levy Agreement 
with the Department of Environment Food
and Rural Affairs under which the industry
has undertaken to achieve energy
consumption reduction targets. St Regis 
is comfortably on course to meet its target 
for the year to September 2004. Our UK 
and French paper operations are discussing 
with the relevant authorities the details of
emissions trading schemes to be introduced
from January 2005 in response to the EU
Emissions Trading Directive.
In 2003/04, our paper mills accounted for 82%
of the Group’s total CO2 emissions and 98%
of water usage. Despite increased paper output,
they reduced their total volumes of CO2
emissions and water usage. CO2 emissions
per tonne of paper produced were cut by 3%
Corrugated board recycling The ﬁbre from
corrugated board makes the best raw material for
producing more corrugated case materials paper. DS Smith Plc Annual Report 2004 25
due to a range of initiatives including
commissioning new boilers at the Chouanard
mill in France and cessation of the use of 
coal at the Kaysersberg mill. Water usage 
per tonne of paper produced was reduced by
8%, principally due to increased recycling of
water at a number of the UK mills.
The paper mills increased their recycling 
of reject material, such as plastic and
polystyrene, which is produced during the
paper production process, principally due to
the full year’s operation of Kemsley mill’s
waste-to-energy plant which burns reject
material and generates electricity. Total
recycling of reject material rose by 15%
while waste disposed of to landfill was 34%
lower, due to a combination of increased
recycling and improved processes at several
mills which reduced the volume of waste
generated. Sudbrook mill continued its
investigation and investment programme to
reduce the impact of its effluent discharge.
Other operations
Although the environmental impact of the
Group’s other operations is substantially
lower than that of paper manufacturing, our
Corrugated and Plastic Packaging and Office
Products businesses continue to implement 
a range of projects and benchmarking
programmes to reduce energy consumption,
water and chemicals usage and waste levels.
In 2003/04, our UK Corrugated operations
lowered their total CO2 emissions per
thousand square metres produced by 3%.
Kaysersberg Packaging’s St Just plant
received recognition in the Trophée de l’Eau
scheme, run by its local water regulator, for
eliminating emissions to the local river through
the installation of a closed loop water system.
Spicers continues to focus on reducing the
environmental impact of its vehicle fleet, both
through the increasing use of lower emission
engines and the rationalisation of journeys.
John Dickinson is a founder member of the
WWF 95+ group, which is committed to
promoting legal and sustainable development
in connection with timber procurement.
In addition to the Group’s primary focus on
safety and the environment, the Group places
considerable importance on its dealings with
its employees and local communities.
Employees
The Group maintains its focus on creating 
an environment in which its people meet the
Group’s objectives while feeling that they 
are well managed, treated with respect and
able to fulfil their own potential. Our
divisions and businesses organise training 
and development programmes to meet their
specific needs for raising operational
performance and career development. Five 
St Regis employees successfully completed
the open MBA section of its management
development programme, accredited by the
University of Derby, which has involved 
over 70 supervisory, operational and 
general business managers. Over 20 
DS Smith Packaging junior, middle and
senior managers also participated in this
development programme during 2003/04.
St Regis undertook a division-wide employee
communications survey, which is providing
the basis for developing plans for increased 
employee involvement. A number of UK 
sites have Investors in People accreditation
and DS Smith Plastics, Gloucester is now
working towards the recently introduced
Leadership and Management module. Spicers
has launched a new e-learning initiative, 
open to all its UK employees, to supplement
existing training programmes.
The Group is committed to applying 
equal opportunities in all recruitment and
employment practices. It is also committed,
as a minimum, to meeting the labour rights
and legislation requirements in each of the
countries in which it operates.
Community involvement
The main focus of our community involvement
is through our individual businesses and their
various initiatives to foster good relations
with local communities. The Group supports
charitable fund-raising activities through 
cash contributions and in the form of product
and services or staff time. The majority of 
the modest amount of money donated by the
Group is given by individual operating units,
principally to causes in their local communities.
Donations by the Group headquarters are
focused on a small number of educational,
training and support causes that help young
people become involved in business and
working life. The Group is a member of
Business in the Community and donates 
to The Prince’s Trust. During 2004, John
Dickinson is running a major cause-related
marketing campaign for its Plus Fabric
envelopes which is expected to result in a
substantial contribution to the National Society
for the Prevention of Cruelty to Children.
CO2 EMISSIONS PER TONNE OF PAPER PRODUCED 
WATER USAGE PER TONNE OF PAPER PRODUCED
 
2000
150
300
450
600
750
900
2001 2002 2003 2004
MATERIAL COLLECTED BY 
SEVERNSIDE RECYCLING (’000 TONNES)
696
396
717
424
736
458
773
511
881
569
 
15
30
45
105
60
75
90
2002 2003 2004
PAPER MILLS ENVIRONMENTAL 
PERFORMANCE (INDEX 2002=100)
96
92
94
101
100
100
CORRUGATED PACKAGING 
TOTAL PAPER AND PLASTIC 26 DS Smith Plc Annual Report 2004
CORPORATE GOVERNANCE
The Company is committed to the principle
and application of sound corporate governance.
The Company has complied throughout the
financial year with all the provisions of the
Code of Best Practice set out in Section 1 
of the Combined Code on Corporate
Governance except as stated below in respect
of Remuneration Committee membership
(Combined Code B.2.1). The Combined 
Code was substantially revised in 2003
following the publication of the Higgs and
Smith reports, taking effect for financial
years beginning on or after 1 November
2003. The Board has an ongoing review 
of its corporate governance policy and has
implemented some changes to take account
of the Combined Code and best practice.
Board and Board Committees
The role of the Board
The Board is collectively responsible for
promoting the success of the Company by
directing and supervising the Company’s
affairs. The Board’s role is to provide
leadership of the Company within a
framework of prudent and effective controls
which enable risk to be assessed and managed.
The Board sets the Company’s strategic 
aims and ensures that the necessary financial
and human resources are in place for the
Company to meet its objectives and reviews
management performance.
In addition, the Board sets the Company’s
values and standards and ensures that its
obligations to its shareholders and others 
are understood and met.
The Board currently comprises three
Executive and six non-Executive Directors.
The offices of Chairman and Group Chief
Executive are held separately. Mr RGBeeston
is the Senior Independent Director. During
the year each of the non-Executive Directors
has at all times acted independently of
management and has no relationships which
would materially interfere with the exercise
of their independent judgement and 
decision making. It is recognised that 
Mr D R Piette is not considered a fully
independent non-Executive Director 
because of his length of service.
The Board meets a minimum of eight times
per year. All Board members attend all Board 
proposed by the National Association of
Pension Funds for determining whether 
a non-Executive Director is independent.
Audit Committee
The responsibilities of the Audit Committee,
which meets at least three times a year, cover
all the points recommended by the Combined
Code. The Committee monitors the Group’s
accounting and financial procedures,
including the discussion of the accounting
implications of major transactions, and
receives regular reports on the review 
of internal controls. The Committee is
responsible for the review of the annual
accounts and interim statement and meetings
with the external Auditor. The Audit
Committee receives written confirmation
from the external Auditor as to any
relationships that might have a bearing 
on its independence. The external Auditor 
also confirms whether it considers itself
independent within the meaning of the UK
regulatory and professional requirements. 
The Committee has adopted a policy on the
supply of non-audit services by external
auditors. The external Auditor is permitted 
to undertake some non-audit services, for
example tax compliance and advisory services
and due diligence activities associated with
potential acquisitions and divestments. 
Non-audit services and fees are reported to
the Audit Committee twice a year. For
guidance, annual non-audit fees payable to
the external Auditor should not exceed 75%
of the annual Group audit fee without prior
formal approval of the Committee. Approval
for permitted non-audit services are sought 
as required by the relevant Group policy.
Nomination Committee 
The Nomination Committee considers 
the appointment of Directors, reviews
succession planning at Board level, and
makes recommendations to the Board as 
a whole. A rigorous process is in place for 
the appointment of new Directors, involving
the use of external recruitment consultants,
where appropriate, followed by meetings both
with the Committee and then with the Board.
Remuneration Committee
The Remuneration Committee is responsible
for determining the remuneration of the
Executive Directors, the Company Secretary
and relevant Committee meetings unless
exceptional circumstances prevent them 
from attending.
The Board and its Committees, as detailed
below, receive timely information of a quality
that enables them to carry out their roles
effectively. All Directors have access 
to the advice and services of the Company
Secretary. A procedure is in place for any
Director to take independent professional
advice in the furtherance of his duties at 
the Company’s expense. The Directors are
provided with opportunities for training 
to ensure that they are kept up to date on
relevant new legislation and changing
commercial risks. New Directors are given
appropriate induction training, including site
visits to major business units. During the year
the Board carried out a comprehensive self-
appraisal which was led by the Chairman 
and the Senior Independent Director. The
appraisal included the performance of Board
Committees. All Directors and the Company
Secretary participated in the exercise. During
the current financial year the Board intends 
to repeat the process. The non-Executive
Directors meet separately at least once a year
to appraise the Chairman’s performance.
Board Committees
The principal committees of the Board are
the Audit, Remuneration and Nomination
Committees. The Audit Committee comprises
independent non-Executive directors. In 
order to comply with the new Corporate
Governance provisions, Mr A P Hichens, 
as Chairman of the Company, retired as a
member of this Committee on 19 April 2004.
The Remuneration Committee comprises
independent non-Executive Directors with 
the exception of Mr Piette, who is no longer
considered an independent non-Executive
Director by reason of his length of service.
The Nomination Committee comprises the
Chairman, the Group Chief Executive and 
Mr Beeston, the Senior Independent Director.
All Board committees have written terms 
of reference agreed by the Board. A copy 
of these is available on the Company’s
website. The Audit Committee is chaired 
by Mr P M Johnson, the Remuneration
Committee is chaired by Mr Beeston and 
the Nomination Committee is chaired by 
Mr Hichens. The Board has used the criteria DS Smith Plc Annual Report 2004 27
and senior management. Mr Piette, a member 
of this Committee, is not considered fully
independent in accordance with current
corporate governance guidelines, by reason 
of his length of service. However he provides
an international view on remuneration and
continues to provide an objective opinion.
The Report on Remuneration is set out on
pages 28 to 34.
Other Board Committees 
The Board has delegated certain powers,
mainly of a routine nature, to the General
Purposes Committee, which comprises the
Group Chief Executive and the Group
Finance Director under the chairmanship 
of the Group Chief Executive.
Relations with shareholders
The Company has a programme of regular
meetings (which sometimes includes the
Chairman and the Senior Independent
Director), site visits and results briefings 
with its major institutional shareholders,
which provides opportunities to discuss 
the progress of the business. The Board also
receives feedback from major shareholders 
in the form of independently prepared
reports. The Annual General Meeting is 
used as an opportunity to communicate with
private shareholders, including a short
presentation on the business and current
trading position as well as an opportunity 
for questions from investors to the Chairman
of the Board and the chairmen of the Audit
and Remuneration Committees. Regular
communication with shareholders also 
takes place through the annual and interim
reports and via the Company’s website
www.dssmith.uk.com.
Internal control
The Board has overall responsibility for the
Group’s system of internal control and for
reviewing its effectiveness. Such a system,
however, can only be designed to manage
rather than eliminate risk and can therefore
provide only reasonable and not absolute
assurance against material misstatement 
or loss. In accordance with the Turnbull
Committee guidance, the Company
established the procedures necessary to
ensure that there is an ongoing process 
for identifying, evaluating and managing 
the significant risks to the Group. These
procedures have been in place for the whole
of the financial year ended 30 April 2004 
and up to the date of the approval of these
financial statements. 
The Board determines the objectives and
broad policies of the Group. It meets regularly
and there is a schedule of matters which 
are required to be brought to it for decision.
The Board has delegated to management the
responsibility for establishing a system of
internal control appropriate to the business
environments in which the Group operates.
Key elements of this system include:
• a set of Key Corporate Values which have
been communicated to all concerned;
• a clearly defined divisionalised
organisation structure for monitoring 
the conduct and operations of individual
business units; 
• clear delegation of authority throughout 
the Group, starting with the matters
reserved for the Board;
• a formal process for ensuring that key risks
affecting all the Group’s operations are
identified and assessed on a regular basis,
together with the controls in place to
mitigate these risks. Risk consideration 
is embedded in decision-making processes.
The most significant risks are periodically
reported to the Board and considered by it;
• the preparation and review of comprehensive
annual divisional and Group budgets and
an annual review and approval by the
Board of the corporate strategy;
• the monthly reporting of actual results 
and their review against budget, forecasts
and the previous year, with explanations
obtained for all significant variances;
• clearly defined policies for capital
expenditure and investment, including
appropriate authorisation levels, with larger
capital projects, acquisitions and disposals
requiring Board approval;
• procedure manuals laying down common
control procedures and policies to apply
throughout the Group;
• formal quarterly meetings between central
and divisional management to discuss
strategic, operational and financial issues.
The Group’s operational audit function
undertakes regular reviews of the Group’s
operations and their systems of internal
control. The work of the function is
overseen by the Audit Committee, which
regularly reviews its plans and activities.
The Directors can confirm that they have
reviewed the effectiveness of the Group’s
system of internal control. This exercise
included a process of self-certification 
by senior divisional management in 
which they confirmed that their divisions
have complied with Group policies and
procedures and reported any significant
control weaknesses identified during 
the past year. It also involved reviewing 
the results of the work of the Group’s
operational audit function and the risk
identification and management processes
identified above.
Going concern
The Directors, having made appropriate
enquiries, have a reasonable expectation 
that the Group has adequate resources to
continue in operational existence for the
foreseeable future. For this reason, they
continue to adopt the going concern basis 
in preparing the accounts on pages 38 to 62. 28 DS Smith Plc Annual Report 2004
REPORT ON REMUNERATION
In accordance with the Directors’ Remuneration
Report Regulations 2002, shareholders’
approval of the Remuneration Report will 
be sought at the forthcoming Annual General
Meeting. The Remuneration Report has 
been approved by the Board of Directors.
(a) Composition and role of the
Remuneration Committee (‘the Committee’)
The Committee consists entirely of 
non-Executive Directors. The members 
of the Committee are Mr R G Beeston
(Chairman), Mr C J Bunker, Mr P M Johnson, 
Mr R E C Marton and Mr D R Piette. They
are all independent, with the exception of 
Mr Piette, who is not considered a fully
independent non-Executive Director due 
to his length of service. The members of 
the Committee have no personal financial
interest, other than as shareholders of the
Company, in the matters to be decided by the
Committee, no potential conflicts of interest
arising from cross-directorships and no day-
to-day involvement in running the business.
The Committee operates under written terms
of reference agreed by the Board and is
responsible for determining the remuneration
of Executive Directors. It also considers the
remuneration of senior executives reporting
to the Group Chief Executive (taking into
account recommendations from him), and the
incentives of senior executives reporting to
the other Executive Directors.
(b) Compliance
The Board, in conjunction with the Committee,
has taken the necessary steps to ensure that
the Company complies with the provisions 
of the Combined Code (‘the Code’), which
relate to Directors’ remuneration. Certain
disclosures in this Report fall within the
scope of matters for review by the Auditor.
(c) Advisers to the Committee
New Bridge Street Consultants LLP have
been appointed by the Committee to provide
advice on the remuneration of Executive
Directors and other managers. New Bridge
Street Consultants LLP also provide advice 
to the Company in connection with the
operation of the Company’s employee share
schemes. The Committee consults with the
Chairman of the Company and with the
Group Chief Executive, who may attend 
a meeting of the Committee on matters 
with substantial overseas operations, and
relative to UK companies generally with
similar market capitalisations. As noted
above, the Company’s normal policy is to 
set basic salaries at around median levels.
When determining the level of salary, the
Committee also takes into account the
relative performance of the Group and 
of the individual Director, together with 
his experience in the particular job. 
The Committee also considers relevant
information on the remuneration of other
senior executives and the pay of employees
elsewhere in the Group and, where
appropriate, communicates its views on the
levels of such remuneration to the Group
Chief Executive. During its deliberations, 
the Committee has regard to salary levels 
in other countries where this is relevant 
for any non-UK senior executive. 
The table of emoluments of the Directors 
is given on page 31.
(f) Annual bonus
The Executive Directors participate in an
annual bonus scheme which has been
approved by the Committee. For the financial
year 2003/04, the maximum annual bonus for
Executive Directors was set at 80% of basic
salary, half of which was receivable in cash
and half in shares under the Restricted Share
Plan receivable on the third anniversary of
the award. The outcome of the results for the
financial year 2003/04 mean that an annual
bonus of 35% of salary is payable in respect
of the financial year ended 30 April 2004
(2002/03: 60%).
Following a review of incentives during 
the year, the Committee has determined that
in the scheme applicable to the Executive
Directors for the financial year 2004/05, the
maximum value of the bonus will be reduced
to 60% of basic salary at 31 July 2005,
payable in cash. The Restricted Share Plan
will cease to be operated. The amount of
annual bonus payable to Mr A D Thorne and
Mr G M Morris for the financial year 2004/05
will be dependent entirely upon the Company’s
earnings per share performance relative 
to targets determined by the Committee 
at the start of the year and for Mr J-P Loison
will be based 50% on earnings per share
performance and 50% on targets, as
which do not directly affect them, although
they are not involved in deciding their own
remuneration. The Committee is assisted 
by the Company Secretary and the Human
Resources Director, and receives advice from
Mercer Human Resource Consulting, the
Actuary to the Company’s pension scheme, 
in relation to Executive Directors’ pensions.
(d) General policy on remuneration
The Committee’s overall policy is to ensure
that the remuneration packages enable the
Company to attract, retain and motivate
Executive Directors and other senior managers
of sufficient calibre to meet the Company’s
needs. In addition, the remuneration packages
are designed to align the interests of executives
and shareholders and to link a significant
proportion of executives’ remuneration to
performance. To achieve this, the Company’s
normal approach is to set basic salaries at
around median levels relative to analogous
businesses, whilst operating cash and share
incentive schemes which are linked to the
achievement of short-term and long-term
performance targets. The remuneration
package is described more fully in the
remainder of this report, but the main
elements are as follows:
• basic salary
• pension provision
• annual bonus scheme
• long-term incentives, comprising:
(i) share option grants under the Executive 
Share Option Scheme; and 
(ii) subject to shareholder approval at the
Annual General Meeting, awards under 
the Long-Term Incentive Plan.
Basic salaries and pension provision are not
linked to performance (except when basic
salaries are reviewed), whilst payments under
the annual bonus scheme, the Executive
Share Option Scheme and the Long-Term
Incentive Plan are wholly dependent upon
performance against agreed targets.
(e) Basic salaries
The basic salaries of Executive Directors are
reviewed annually on 1 August, in conjunction
with other aspects of remuneration. The basic
salary for each Executive Director is targeted
at the rates of salary for similar jobs within 
a selected group of analogous UK businesses DS Smith Plc Annual Report 2004 29
determined by the Committee, for the
Kaysersberg Packaging Division.
The annual bonus scheme is not contractual
and bonuses under the scheme are not
eligible for inclusion in the calculation 
of the participating Executive Directors’
pension scheme benefits.
As far as practicable, the scheme has 
been extended to divisional executives.
However, their bonus schemes are based 
on differing criteria relating to the operating
performance targets of the division in which
they are employed.
(g) Long-term incentives
In the 2003/04 financial year, in addition to
annual bonus schemes, the Company operated
an Executive Share Option Scheme for
executives. Having reviewed the current
incentive plans, the Remuneration Committee
has decided to restructure them so that there
is a greater focus on long-term performance,
partly measured on the basis of total
shareholder return relative to other companies.
Accordingly, as outlined above, the annual
bonus potential has been reduced and the
Restricted Share Plan will no longer be
operated. Additionally, shareholder approval
will be sought at the Annual General Meeting
for the adoption of a new Long-Term
Incentive Plan to complement the Executive
Share Option Scheme.
In order to ensure that the aggregate award
levels executives receive under the Long-
Term Incentive Plan and the Executive 
Share Option Scheme are not excessive, 
in cases where executives are granted 
awards under both schemes in the same 
year, the maximum awards for the most
senior executives under each scheme will 
not exceed 75% of salary worth of shares,
unless there are exceptional circumstances
such as a high level recruitment or promotion,
in which case the annual limit will be 100%
of salary worth of shares under each scheme. 
In conjunction with the adoption of the Plan,
senior executives will be expected to retain 
in shares half of the after-tax gains on the
vesting of awards until they have built up a
shareholding equal to 100% of salary in the
case of Executive Directors and 50% in the
case of other senior executives.
(i) Executive Share Option Scheme
An Executive Share Option Scheme 
is operated for Executive Directors and
other senior executives. The Committee
grants approved and unapproved options
to UK and overseas executives on 
a phased basis.
The exercise of any options granted under
this Scheme is subject to the achievement
of long-term performance conditions. 
The target for future options granted 
will be that the growth in the Company’s
normalised earnings per share must match
or exceed the growth in the UK Retail
Prices Index plus an average of 3% per
annum over the three year period
following grant, with no retesting facility.
The base financial year for the purposes
of measuring earnings per share 
growth will be the financial year prior 
to the grant date. Normally, no part of 
the option may be exercised unless the
performance target has been achieved.
(ii) Long-Term Incentive Plan
Shareholder approval will be sought 
at the Annual General Meeting for the
adoption of this plan. Full details of 
the plan are contained in the Notice 
of Annual General Meeting on page 64. 
The key features of the plan are that:
• awards will be made to selected
Executive Directors and other senior
executives over shares in the Company;
• performance will be measured over 
a single period of three financial years;
• awards will vest based on the Company’s
total shareholder return (being the
increase in share price and the value 
of reinvested dividends) compared to 
a comparator group of companies. 
The Committee has determined that the
constituents of the FTSE Mid 250 Index
(excluding investment trusts) should be
the comparator group for initial awards;
• if the Company’s total shareholder
return is ranked at the upper quartile 
of the group or higher, the full award
will vest reducing on a straight-line
basis to 30% of the award vesting for
median performance. None of the award
vests for below median performance;
• additionally, no awards will vest,
irrespective of total shareholder return
performance, unless the Company’s
earnings per share growth matches 
or exceeds the growth in the Retail
Prices Index over the three year period.
The executives’ long-term incentives,
therefore, take into account the Company’s
absolute share price performance (via the
grant of market value share options), its
relative performance (via awards under
the Long-Term Incentive Plan, based 
on total shareholder return) and its
underlying financial performance (via the
earnings per share performance condition
that applies to share options and awards
under the Long-Term Incentive Plan).
The Committee considers that this will
provide for the most robust assessment 
of the Company’s long-term performance.
The earnings per share figures are 
derived from the audited accounts and 
the verification of the calculation of
earnings per share growth as well as 
the total shareholder return calculation
will be performed by New Bridge Street
Consultants LLP, in their capacity as
advisers to the Committee.
The Executive Directors are also eligible to
participate in the DS Smith International
Sharesave Scheme, which is an all-
employee share scheme approved by the
Inland Revenue. This scheme does not
contain performance conditions, since the
Inland Revenue requires that options must
be offered to all eligible employees on the
same terms, without performance conditions.
The interests of the Directors in the 
share capital of the Company and details
of options granted to date under the
Executive Share Option Scheme are
shown on pages 33 and 32 respectively.
(h) Beneﬁts in kind
Mr Thorne has the provision of a company
car and a driver and free fuel. Mr Morris
receives a car allowance. Mr Thorne and 
Mr Morris both receive unapproved life
cover, permanent health insurance and private
medical cover. Mr Loison receives from
Kaysersberg Packaging S.A.S. life cover, 
a car allowance, free fuel, private medical 30 DS Smith Plc Annual Report 2004
REPORT ON REMUNERATION 
cover and his utility and telephone bills are
also paid for by Kaysersberg Packaging.
(i) Pensions
Mr Thorne and Mr Morris participate in 
a funded contributory defined benefit pension
scheme with death in service cover. Subject
to the variations mentioned below, the Group
provides pension benefits for UK-based
Executive Directors on retirement at their
normal pension age of 60 based on an accrual
rate of one thirtieth with reference to basic
salary less a deduction equal to the basic State
pension. This is subject to a maximum pension
of two-thirds of their final pensionable pay.
As far as possible, the benefit is provided
through the Inland Revenue Approved Group
Pension Scheme, in which other employees
of the Group participate. In the case of 
Mr Thorne, whose benefits are subject to the
Inland Revenue ‘earnings cap’, the Company
has given a promise to provide the balance
through a non tax-approved unfunded
arrangement. The total accumulated unfunded
provision at 30 April 2004 is £3.3 million
(£3.1 million), £0.5 million of which relates
to Mr Thorne.
In the case of newly appointed UK-based
Executive Directors, the Company’s normal
policy under the current legislation in 
relation to the earnings cap is to provide
compensation by way of a cash supplement,
rather than by way of a funded or unfunded
arrangement. Accordingly, Mr Morris
receives a cash supplement of £40,000 per
annum. This payment is not pensionable 
and is not considered as salary for the
purpose of calculating any bonus payment.
Life cover of four times basic salary is
provided under the Approved Scheme on death
in service in addition to spouses’ pensions of
two-thirds of the members’ prospective
pensions plus dependants’ benefits. For those
UK-based Executive Directors whose
benefits are restricted by the ‘earnings cap’,
optional additional life cover is available.
Spouses’ pensions on death after retirement
are two-thirds of the members’ pensions,
before any reduction for early retirement 
or commutation of pension for cash.
Pensions in payment are increased annually
in line with the increase in the UK Retail
Prices Index, subject to a maximum
guaranteed increase of 5% each year with the
possibility of further discretionary increases.
There is no allowance in the transfer value
calculation basis for such discretionary
increases or other discretionary benefits.
All members, including UK-based Executive
Directors, contribute to the Approved Scheme
at the rate of 6% of their pensionable pay,
subject to a maximum, for those affected, 
of 15% of the earnings cap.
Members have the option of paying
Additional V oluntary Contributions. Neither
the contributions nor the resulting benefits 
are included in the table on page 33.
Mr Loison participates in a funded defined
benefit pension scheme, which does not
require an employee contribution. The Group
provides pension benefits for Mr Loison at
his normal pension age of 65 based on an
accrual rate of one fortieth with reference 
to final average salary equal to the average 
of the last full five years’ annual salaries
preceding retirement, less any offset pensions.
This benefit is provided as a supplementary
arrangement to the mandatory national
programme, which operates on a pay-as-you-
go basis and supplements social security
benefits. Benefits under these arrangements
are dependent on salary progression during
an individual’s career.
A charge over certain assets of the Company
has been made as security against future
pension payments pursuant to the non-tax
approved unfunded pension arrangements 
on behalf of two former Directors, 
Mr D F Buttfield and Mr J P Williams.
(j) Service contracts and compensation
The Committee’s general policy is that 
the notice periods for Executive Directors
appointed in future will not exceed one year,
although on appointment it may be necessary
in exceptional cases to offer a longer initial
period which reduces to one year or less 
after a specific date. In addition, service
contracts for newly appointed directors 
will not normally include liquidated damages
provisions. Instead, the payment of any sums
due on the termination of employment by 
the Company will be determined pursuant 
to general contractual principles, and with
full recognition of a Director’s duty to
mitigate his loss.
The service contract for Mr Thorne is 
dated 28 February 2001 and expires when 
he reaches his normal retirement age of 60. 
It may be terminated by 12 months’ notice 
by the Company and by Mr Thorne. The
Company may terminate the contract with
immediate effect, in which case it must make
a payment equating to 12 months’ basic
salary, plus an equal payment in respect 
of the loss of his contractual benefits. 
The service contract for Mr Morris is 
dated 5 November 2002 and expires when 
he reaches his normal retirement age of 60. 
It may be terminated by 12 months’ notice 
by the Company, and by Mr Morris. The
Company may terminate the contract with
immediate effect, in which case it must make
a payment equal to 12 months’ basic salary,
plus an equal payment in respect of 
the loss of his contractual benefits. The
service contract for Mr Loison is dated 
9 December 2003. This is in addition to 
his employment contract with Kaysersberg
Packaging S.A.S. (a wholly owned French
subsidiary of the Company), dated 
22 March 1994. The contract with the
Company is terminable by the Company
giving 12 months’ notice or by Mr Loison
giving six months’ notice. The contract 
with Kaysersberg Packaging S.A.S. is 
also terminable by that company giving 
12 months’ notice or Mr Loison giving 
six months’ notice.
(k) Policy on external appointments
Executive Directors are allowed to accept
external appointments as a non-Executive
Director of up to two other companies
provided that these are not with competing
companies and are not likely to lead to
conflicts of interest. In normal circumstances,
the Chief Executive may not accept more
than one external appointment. Executive
Directors are normally allowed to retain 
the fees paid from these appointments.
Currently no Executive Director has an
external appointment.
(l) Fees for non-Executive Directors
The remuneration for non-Executive
Directors consists of annual fees for their
services as members of the Board and,  DS Smith Plc Annual Report 2004 31
m) Directors’ emoluments (auditable)
Pension Pension
Annual Deferred Pension 2004 2003 contributions contributions
Salary/fees bonus bonus Beneﬁts supplement total total 2004 2003
£’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Chairman
A P Hichens 150 – – 34 – 184 175––
Chief Executive
A D Thorne 390 69 69 23 – 551 609 15 14
J-P Loison 97 31 31 6 – 165 –––
Finance Director
G M Morris 236 41 41 19 40 377 20963
Non-Executives
R G Beeston 44 –––– 44 37––
C J Bunker 14 –––– 14 –
––
P M Johnson 42 –––– 42 39––
R E C Marton 35 –––– 35 33––
D R Piette 40 –––– 40 38––
Total 1,048 141 141 82 40 1,452 1,140
Mr Morris is subject to the Inland Revenue ‘earnings cap’ and therefore he received during the year an additional 
non-pensionable payment.
Mr Loison’s salary and beneﬁts in kind from Kaysersberg Packaging S.A.S. are paid in euros and have been converted to sterling 
at the average exchange rate for the year. 
The deferred bonus has been included in the table above as it was awarded in respect of the results for the ﬁnancial year 2003/04.
Shares in DS Smith Plc to the value of the deferred bonus will be purchased on 1 August 2004 and held in the Restricted Share Plan. 
The shares are transferred to the participants on the third anniversary of the award, but lapse on termination of employment. The total
emoluments of Mr Thorne excluding the deferred bonus were £482,000. The total emoluments of Mr Morris excluding the deferred
bonus were £336,000. The total emoluments of Mr Loison excluding the deferred bonus were £134,000.
where relevant, for their work on selected
committees. Non-Executive Directors, other
than the Chairman, have letters of appointment
for a term of three years whereupon they are
normally renewed but for no more than three
terms in aggregate. Mr Piette has a rolling 
12 month letter of appointment from the
Company. Their respective dates of
appointment are shown on page 22.
The Chairman’s letter of appointment
provides for his appointment to continue 
until further notice, subject to review by the 
Board no later than 30 September 2005. His
appointment may be terminated immediately
by the Company if he is not re-elected at 
any general meeting of shareholders (or on 
giving nine months’ notice if this occurs in
connection with a change of control of the
Company); or on the Chairman giving not less
than six months’ notice; or on the Company
giving not less than 12 months’ notice. If his
appointment is terminated by the Company
without notice, the Company may make a
payment in lieu of notice. The remuneration 
of non-Executive Directors is determined by
the Board on the advice, from time to time, of
external independent consultants and is subject
to a maximum aggregate level agreed by
shareholders. Non-Executive Directors do 
not participate in, or vote on, any discussion
relating to their own remuneration.
Non-Executive Directors are not eligible 
for pension scheme membership and do 
not participate in any of the Group’s 
annual bonus, share option or other 
incentive arrangements. 32 DS Smith Plc Annual Report 2004
REPORT ON REMUNERATION 
(n) Directors’ interests in share options (auditable)
Directors’ interests in share options over ordinary shares are as follows:
Options Options Options 
Options granted exercised lapsed Options Dates
held at during during during held at Exercise from which Expiry
Name of Director 30 April 2003* the year the year the year 30 April 2004 price (p) exercisable date
A D Thorne 428,880 – – – 428,880 139.89 2 Mar 04 1 Mar 11
215,834 – – – 215,834 138.96 27 Jul 04 26 Jul 11
243,979 – – – 243,979 135.23 26 Jul 05 25 Jul 12
– 241,245 – – 241,245 149.22 31 Jul 06 30 Jul 13
J-P Loison 85,528 – – – 85,528 254.50 4 Aug 97 3 Aug 04
88,415 – – – 88,415 169.62 30 Jul 00 29 Jul 07
61,313 – – – 61,313 187.94 31 Jul 01 30 Jul 08
9,515 – – – 9,515 167.12 30 Jul 02 29 Jul 09
93,751 – – – 93,751 155.08 5 Oct 02 4 Oct 09
93,547 – – – 93,547 159.85 31 Jul 03 30 Jul 10
124,497 – – – 124,497 139.37 27 Jul 04 26 Jul 11
128,988 – – – 128,988 151.53 26 Jul 05 25 Jul 12
142,779 – – – 142,779 148.72 31 Jul 06 30 Jul 13
G M Morris 161,152 – – – 161,152 142.69 18 Dec 05 17 Dec 12
– 154,129 – – 154,129 149.22 31 Jul 06 30 Jul 13
*or at date of appointment
During the year the Company made a one-for-ﬁve rights issue. The number of shares under option and the option price of those shares
under option held have been adjusted accordingly.
All of the above options were granted for nil consideration.
The market price of the ordinary shares at 30 April 2004 was 172.0p and the range (adjusted for the rights issue) during the year 
was 139.0p to 178.1p.
Aggregate gains made by directors on exercise of share options in the year were £nil (£nil).
All options will be exercisable from the dates stated above, subject to them satisfying the performance target stated on page 29.
(o) Directors’ interests under the Restricted Share Plan (auditable)
The Company has operated the Restricted Share Plan, which is described on page 28. The Restricted Share Plan will cease 
to be operated with effect from the ﬁnancial year 2004/05. Details of the Directors’ interests in the Plan are as follows:
Awards
granted/ Awards Interests
Interests under commitments lapsed/ Market price Market price under
the Plan at made crystallised Date on date at date scheme at Exercisable Expiry
Executive Directors 30 April 2003* during year in year of award of award of exercise 30 April 2004 from date
A D Thorne 7,705 –––– – 7,705 1 Aug 04 31 July 08
–71,774––– – 71,774 1 Aug 06 31 July 10
J-P Loison 18,508–––– – 18,508 1 Aug 03 31 July 07
19,140–––– – 19,140 1 Aug 04 31 July 08
21,196–––– – 21,196 1 Aug 05 31 July 09
42,349–––– – 42,349 1 Aug 06 31 July 10
G M Morris – 28,219––– – 28,219 1 Aug 06 31 July 10
*or at date of appointment
During the year the Company made a one-for-ﬁve rights issue and the Directors’ interests in the Plan have been adjusted accordingly.
The exercise price is £1 in total, the grant being given in relation to the deferred bonus for the years ended 1999/00, 2000/01,
2001/02 and 2002/03 under the Restricted Share Plan described on page 28. DS Smith Plc Annual Report 2004 33
(p) Directors’ interests in shares 
The beneﬁcial interests of the Directors and their families in the ordinary shares of the Company were as shown below. Each Director
who held shares at the time of the rights issue, took up his full entitlement under the terms of the rights issue.
30 April 2003* 30 April 2004
Name of Director Beneﬁcial Non-beneﬁcial Beneﬁcial Non-beneﬁcial
A P Hichens 385,000 – 462,000 –
A D Thorne 47,000 – 56,400 –
J-P Loison –– ––
G M Morris –– ––
R G Beeston 25,000 – 30,000 –
C J Bunker –– 10,000 –
P M Johnson 25,000 – 30,000 –
R E C Marton 25,000 – 30,000 –
D R Piette –– ––
*or at date of appointment
Any ordinary shares required to fulﬁl entitlements under the Executive Share Option Scheme and the Restricted Share Plan may be
provided by the David S Smith Group General Employee Beneﬁt Trust (‘the Trust’). As beneﬁciaries under the Trust, the Executive
Directors are deemed to be interested in the shares held by the Trust which, at 30 April 2004, amounted to 1,704,439 ordinary shares.
(q) Directors’ pension entitlements (auditable)
The following UK-based Executive Directors had accrued entitlements under deﬁned beneﬁt schemes as follows:
Transfer 
value of net
increase in Total change
Increase Total accrued accrual over Transfer value Transfer value in value during
Employee Gross increase in accrued pension at period (net of accrued of accrued period (net of 
contributions paid in accrued pension net 30 April of Director’s pension at 30 pension at 30 Director’s
during the pension of inﬂation 2004 contribution) April 2004 April 2003 contribution)
period (1) (2) (3) (4) (5) (6) (7)
Name of Director ££££££££
A D Thorne 14,887 13,969 13,196 41,555 169,457 580,333 357,624 207,822
G M Morris 5,955 3,370 3,317 5,260 36,066 66,635 21,357 39,323
J-P Loison 0 1,489 1,489 34,557 15,378 356,913 333,453* 23,460
Pension accruals shown are the amounts which would be paid annually on retirement based on service to the end of the year.
Transfer values have been calculated in accordance with version 8.1 of guidance note GN11 issued by the actuarial profession.
The value of net increase (4) represents the incremental value to the Director of his service during the year, calculated on the assumption
service terminated at the year end. It is based on the accrued pension increase (2) after deducting the Directors’ contribution.
The change in transfer gap value (7) includes the effect of ﬂuctuations in the transfer value due to factors beyond the control of the
Company and Directors, such as stock market movements. It is calculated after deducting the Directors’ contribution and deducting 
pension beneﬁts payments made to those employees who retired during the year.
*Mr Loison became a main Board Director on 9 December 2003. Consequently, his 2003 ﬁgures are as at 9 December 2003 instead
of 30 April 2003 and no allowance has been made for inﬂation up to 30 April 2004. 34 DS Smith Plc Annual Report 2004
REPORT ON REMUNERATION
(r) Total Shareholder Return performance
The following graph illustrates the Company’s total shareholder return performance since 
1 May 1999, in accordance with paragraph 4 of the Directors’ Remuneration Report 
Regulations 2002, relative to the FTSE Mid 250 Index.
The Company is a member of the FTSE Mid 250 Index and, accordingly, this index 
is considered to be the most appropriate comparator group for this purpose.
Smith (DS) FTSE Mid 250 Index
This graph looks at the value, by 30 April 2004 of £100 invested in Smith (DS) over the 
last ﬁve ﬁnancial years compared with that of £100 invested in the FTSE Mid 250 Index. 
The other points plotted are the values at intervening ﬁnancial year-ends.
On behalf of the Board
Bob Beeston
Chairman of the Remuneration Committee
23 June 2004 
40
200
80
0
120
160
TOTAL SHAREHOLDER RETURN (Source: Thomson Financial)
2000 2001 1999 2002 2003 2004 DS Smith Plc Annual Report 2004 35
DIRECTORS’ REPORT
DS Smith Plc Annual Report 2004 35
The Directors submit their Annual Report 
and the audited financial statements for the
financial year ended 30 April 2004.
Principal activities and business review
The Company acts as the holding company 
of a group, which, during 2003/04, was
engaged in the production of corrugated 
and plastic packaging and of paper, primarily
from recycled waste, and the distribution 
of office products. A full review of the
activities during the financial year ended 
30 April 2004 and future developments is
given in the Chairman’s Statement, Chief
Executive’s Review and in the Operating 
and Financial Reviews on pages 4 to 21. 
The principal subsidiary undertakings are
listed in note 32 on page 62.
Results for the year
The financial results are shown on pages 38
to 62.
Dividends
An interim dividend of 2.8p net per ordinary
share was paid on 9 March 2004 and the
Directors recommend a final dividend 
of 5.6p net per ordinary share, making 
a total dividend to be paid for the year of 
8.4p (2002/03: 8.8p) net per ordinary share.
The final dividend of 5.6p per ordinary share,
together with the restated interim dividend 
of 2.6p, maintains the total dividend for the
year, restated for the rights issue, at 8.2p.
Subject to approval of shareholders at the
Annual General Meeting to be held on 
10 September 2004, the final dividend will be
paid on 21 September 2004 to shareholders
on the register at the close of business on 
20 August 2004. The dividends per ordinary
share stated above are those actually paid 
or to be paid. Neither the interim or prior
year dividend per ordinary share figures have
been restated for the bonus element inherent
in the rights issue, details of which are given
below. Historic dividends per share have been
restated in the five year summary on page 63.
Share capital
64,540,651 new ordinary shares were issued
following the one-for-five rights issue
announced on 4 March 2004. These shares
were fully subscribed, resulting in total
proceeds on issue of £70.4 million (net of
expenses). These new shares ranked equally
in all respects with the existing ordinary
shares. Pursuant to the Company’s employee
share option schemes, 1,207,282 ordinary
shares of 10p each were issued during the
year. 9,480 shares pursuant to the Company’s
employee share option schemes were issued
between 30 April 2004 and 23 June 2004
inclusive. Under the rules of the Company’s
share option schemes and following Inland
Revenue approval, adjustments were made 
to the option price and to the number of
ordinary shares under option for all options
outstanding as at the date of the rights issue.
The Company has not utilised its authority 
to make market purchases of shares granted
to it at the 2003 Annual General Meeting 
but will be seeking to renew such authority 
at this year’s meeting.
Substantial shareholders
At 23 June 2004, the Company has been
informed of the following notifiable interests
in its issued ordinary share capital:
Ordinary 
shares held %
Deutsche Bank AG 47,139,699 12.17%
Henderson Global 
Investors 38,500,968 9.94%
Newton
Management Ltd 24,301,501 6.27%
Standard Life 
Investments 17,350,266 4.48%
Legal & General
Investment 
Management Ltd 13,147,225 3.39%
Acquisitions and disposals
On 3 March 2004 the Group announced 
its intention to acquire LINPAC Containers
Group, a UK manufacturer of corrugated
packaging. The acquisition was subject to 
the approval of shareholders, which was
given at the EGM on 22 March 2004. The 
net cost of the acquisition was £167 million
including all fees for the transaction. 
In October 2003 the Group acquired the
business and certain assets and liabilities 
of the Macfarlane Group Plc corrugated
packaging operations at Dundee, Govan 
and North Shields. One of these plants and 
a DS Smith Packaging sheet plant were
subsequently sold in March 2004.
Research and development
The Group recognises the importance 
of continuing to invest in research and
development. It is Group policy to develop
new product specifications commensurate
with environmental needs and packaging
solutions required by customers. Research is
also conducted into ways to improve product
quality and to find more cost efficient methods
of production and distribution. Research and
development is conducted within divisional
operations and expenditure is not significant.
Directors
The biographies of the present Directors are
on page 22. All the present Directors served
throughout the year except as follows: 
Mr C J Bunker was appointed as a non-
Executive Director and Mr J-P Loison was
appointed as an Executive Director of the
Company on 9 December 2003. Other than 
as previously disclosed in this Report and 
in respect of existing service agreements, 
no Director, either during or at the end of the
financial year, has been materially interested
in any significant contract or arrangement 
in relation to the Group’s business.
Re-election of Directors
The Articles of Association require that all
Directors who are subject to retirement by
rotation retire every three years, but they are
eligible to submit themselves for re-election
by the shareholders. The Directors retiring by
rotation at the Annual General Meeting on 
10 September 2004 are Mr A D Thorne, 
Mr R G Beeston and Mr D R Piette but,
being eligible, they offer themselves for 
re-election at the Meeting. Mr Bunker and 
Mr Loison having been appointed to the
Board since the last Annual General Meeting
and in accordance with the Articles, retire
from office at the Meeting and, being eligible,
offer themselves for election. Mr Loison has
a service contract with the Company. This is
in addition to his employment contract with
Kaysersberg Packaging S.A.S. (a wholly
owned French subsidiary of the Company).
The contract with the Company is terminable
by the Company giving 12 months’ notice.
The contract with Kaysersberg Packaging
S.A.S. is also terminable by that company
giving 12 months’ notice. 36 DS Smith Plc Annual Report 2004
DIRECTORS’ REPORT
Directors’ interests in shares
The interests of the Directors and their
immediate families in the ordinary shares of
10p each of the Company, including options
granted but not yet exercised under the
Executive Share Option Schemes, were as
shown in the tables on pages 32 and 33.
There were no changes in the interests of 
the Directors or their immediate families 
in the issued ordinary share capital of the
Company between 30 April 2004 and 
23 June 2004 inclusive.
Employee involvement and communications
The Group is committed to effective employee
communications to promote the understanding
and involvement of all its employees in the
Group’s business objectives and performance.
Communications and personnel policies have
been developed to reflect the philosophy of
operating management. Information is
regularly communicated by briefings and
newsletters. The Group operates a European
Works Council, with representatives drawn
from across the entire workforce in the 
EU countries in which the Group operates.
Meetings are held to provide an exchange 
of transnational information and consultation
with employees. At each meeting, presentations
are made on the Group’s business strategy,
financial results, health and safety and
environmental performance. Business
decisions concerning capital investment,
employment and training take into account
the Group’s public and local responsibilities.
The Group is a member of Business in the
Community and supports the involvement of
its operations in local community activities.
Equal opportunities
The Group wholeheartedly supports 
the principle and achievement of equal
opportunities in employment and its policies
are designed to provide such equality
irrespective of sex, religion, race, marital
status, nationality or age. Every possible step
will be taken to ensure that individuals are
treated equally and fairly. Depending upon
their skills and abilities, the Group applies the
same criteria to disabled persons as it does to
other employees and, if necessary, retraining
is offered to any of its employees who
develop a disability during such employment.
Pension fund
The investment of the Group’s pension fund
assets is managed on a discretionary basis by
Deutsche Asset Management Limited, Schroder
Investment Management Limited and Alliance
Bernstein Institutional Investment Management,
such assets being held independently from the
Group. The professional advisors to the fund
are independent of the Group. The Trustee of 
the pension scheme sends an Annual Report
to members of the scheme. The Trustee
Company has an Investment Sub-Committee
which was established in line with guidelines
from the Myners Report.
Health and safety
The Group recognises its responsibilities and
continues to promote all aspects of health 
and safety in the interests of its employees
and members of the public. A Health and
Safety Policy Statement has been approved
by the Board. The Group provides financial
support to the British Occupational Health
Research Foundation, an organisation which
deploys funds for research into the problems
of occupational ill-health.
Payment to suppliers
Although the Company does not follow any
formal code or standard on payment practice,
the Company agrees terms and conditions in
the UK with each supplier, which include
terms of payment. The Company pays each
supplier accordingly, subject to all the terms
and conditions of the order being satisfied by
such supplier. The aggregate amount owed 
by the Company to trade creditors at 30 April
2004 was equivalent to 27 days of purchases
invoiced by suppliers during the year. 
Charitable and political donations
The Group contributed £109,000 (£112,000)
to charities in the UK. No payments were
made to political parties. Donations were
made by operating divisions to support their
local communities and industries. The Group
also supported a number of other charities
across a range of causes.
Annual General Meeting
The notice of the Annual General Meeting 
of the Company to be held on 10 September
2004, together with explanations of the
Resolutions to be proposed, appears at the
back of this Annual Report.
Auditor
Resolutions to re-appoint KPMG Audit Plc 
as auditor of the Company and to authorise
the Directors to determine their remuneration
will be put to the Annual General Meeting. 
By Order of the Board
Carolyn Cattermole
Secretary
23 June 2004
Directors’ responsibilities for preparation
of ﬁnancial statements
As required by Company law, the Directors
are responsible for the preparation of
financial statements for each financial year
which give a true and fair view of the state 
of affairs of the Company and the Group 
and of the profit or loss for that period. 
In preparing those financial statements, 
the Directors are required to:
• select suitable accounting policies and 
then apply them consistently;
• make judgements and estimates that 
are reasonable and prudent;
• state whether applicable accounting
standards have been followed, subject 
to any material departures disclosed and
explained in the financial statements; and
• prepare the financial statements on 
the going concern basis unless it is
inappropriate to presume that the 
Group will continue in business.
The Directors are responsible for keeping
proper accounting records which disclose with
reasonable accuracy at any time the financial
position of the Company and enable them to
ensure that the financial statements comply
with the Companies Act 1985. They have
general responsibility for taking such steps as
are reasonably open to them to safeguard the
assets of the Group and to prevent and detect
fraud and other irregularities. DS Smith Plc Annual Report 2004 37
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF DS SMITH PLC
We have audited the financial statements 
on pages 38 to 62. We have also audited the
information in the Directors’ remuneration
report that is described as having been audited.
This report is made solely to the Company’s
members, as a body, in accordance with
section 235 of the Companies Act 1985. 
Our audit work has been undertaken so that
we might state to the Company’s members
those matters we are required to state to 
them in an auditor’s report and for no other
purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility
to anyone other than the Company and the
Company’s members as a body, for our audit
work, for this report, or for the opinions we
have formed.
Respective responsibilities of 
Directors and Auditor
The Directors are responsible for preparing
the Annual Report and the Directors’
remuneration report. As described on page
36, this includes responsibility for preparing
the financial statements in accordance 
with applicable United Kingdom law and
accounting standards. Our responsibilities, 
as independent auditor, are established in 
the United Kingdom by statute, the Auditing
Practices Board, the Listing Rules of the
Financial Services Authority, and by our
profession’s ethical guidance.
We report to you our opinion as to whether
the financial statements give a true and 
fair view and whether the financial statements
and the part of the Directors’ remuneration
report to be audited have been properly
prepared in accordance with the Companies
Act 1985. We also report to you if, in our
opinion, the Directors’ report is not consistent
with the financial statements, if the Company
has not kept proper accounting records, if 
we have not received all the information 
and explanations we require for our audit, 
or if information specified by law regarding
Directors’ remuneration and transactions 
with the Group is not disclosed.
We review whether the statement on page 26
reflects the Company’s compliance with the
seven provisions of the Combined Code
specified for our review by the Listing Rules,
and we report if it does not. We are not required
to consider whether the Board’s statements on
internal control cover all risks and controls, or
form an opinion on the effectiveness of the
Group’s corporate governance procedures or 
its risk and control procedures.
We read the other information contained in
the Annual Report, including the corporate
governance statement and the unaudited part
of the Directors’ remuneration report, and
consider whether it is consistent with the
audited financial statements. We consider the
implications for our report if we become aware
of any apparent misstatements or material
inconsistencies with the financial statements.
Basis of audit opinion
We have conducted our audit in accordance with
Auditing Standards issued by the Auditing
Practices Board. An audit includes
examination, on a test basis, of evidence
relevant to the amounts and disclosures in 
the financial statements and the part of the
Directors’ remuneration report to be audited.
It also includes an assessment of the significant
estimates and judgements made by the Directors
in the preparation of the financial statements,
and of whether the accounting policies are
appropriate to the Group’s circumstances,
consistently applied and adequately disclosed.
We planned and performed our audit so as 
to obtain all the information and explanations
which we considered necessary in order to
provide us with sufficient evidence to give
reasonable assurance that the financial
statements and part of the Directors’
remuneration report to be audited are free from
material misstatement, whether caused by
fraud or other irregularity or error. In forming
our opinion we also evaluated the overall
adequacy of the presentation of information in
the financial statements and the part of the
Directors’ remuneration report to be audited.
Opinion
In our opinion:
• the financial statements give a true and fair
view of the state of affairs of the Company
and the Group as at 30 April 2004 and of
the profit of the Group for the year then
ended; and
• the financial statements and the part 
of the Directors’ remuneration report 
to be audited have been properly prepared
in accordance with the Companies 
Act 1985.
KPMG Audit Plc
Chartered Accountants
Registered Auditor
London
23 June 2004 38 DS Smith Plc Annual Report 2004
GROUP PROFIT AND LOSS ACCOUNT
For the year ended 30 April 2004
2004 2003
Before Exceptional
exceptional items and
Before Amortisation items and amortisation
amortisation of intangibles amortisation of intangibles
of intangibles (note 7) Total of intangibles (note 7) Total
Note £m £m £m £m £m £m
Turnover 1 1,488.5 – 1,488.5 1,479.0 – 1,479.0
Cost of sales (1,083.3) – (1,083.3) (1,067.9) – (1,067.9)
Gross proﬁt 405.2 – 405.2 411.1 – 411.1
Operating expenses 2 (316.4) (4.0) (320.4) (323.1) (2.6) (325.7)
Group operating proﬁt 1,3 88.8 (4.0) 84.8 88.0 (2.6) 85.4
Share of operating proﬁts of associated undertakings 15 3.0 0.4 3.4 2.6 0.4 3.0
Total operating proﬁt 91.8 (3.6) 88.2 90.6 (2.2) 88.4
Exceptional loss on sale of businesses* 7 ––– – (8.5) (8.5)
Proﬁt on ordinary activities before interest 91.8 (3.6) 88.2 90.6 (10.7) 79.9
Net interest payable and other similar items 8 (10.4) – (10.4) (10.9) – (10.9)
Proﬁt on ordinary activities before taxation 81.4 (3.6) 77.8 79.7 (10.7) 69.0
Tax on proﬁt on ordinary activities 9 (22.0) – (22.0) (21.6) – (21.6)
Proﬁt on ordinary activities after taxation 59.4 (3.6) 55.8 58.1 (10.7) 47.4
Minority interests – equity (0.6) – (0.6) (0.3) – (0.3)
Proﬁt for the ﬁnancial year 58.8 (3.6) 55.2 57.8 (10.7) 47.1
Dividends paid and proposed 10 (30.6) – (30.6) (28.2) – (28.2)
Retained proﬁt for the ﬁnancial year 26 28.2 (3.6) 24.6 29.6 (10.7) 18.9
Earnings per share:** 11
Basic 15.9p 13.7p
Diluted 15.8p 13.7p
Adjusted 16.9p 16.8p
The Group’s results shown above are derived from continuing operations. Other than the acquisition of LINPAC Containers, there were
no material acquisitions or discontinued operations in either year. The acquisition of LINPAC Containers did not have a material effect 
on the year’s results as it was acquired on 22 March 2004.
The difference between the reported and historical cost proﬁts for each of the years reported above is not material.
The notes on pages 42 to 62 form part of these accounts.
*The loss on sale of businesses in the prior year includes £7.4m of goodwill previously written off to reserves.
**Restated for the bonus element of the rights issue. DS Smith Plc Annual Report 2004 39
GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 30 April 2004
2004 2003
£m £m
Proﬁt for the ﬁnancial year 55.2 47.1
Exchange differences (7.7) 7.3
Total recognised gains and losses relating to the ﬁnancial year 47.5 54.4
GROUP RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’ FUNDS
For the year ended 30 April 2004
2004 2003
£m £m
Proﬁt for the ﬁnancial year 55.2 47.1
Dividends (30.6) (28.2)
Retained proﬁt for the ﬁnancial year 24.6 18.9
Exchange differences on foreign currency net investments (7.7) 7.3
Goodwill previously written off – 7.4
New share capital issued under option schemes 1.8 0.4
Proceeds from rights issue (net of issue costs of £1.9m) 70.4 –
Net increase in shareholders’ funds 89.1 34.0
Opening shareholders’ funds 472.9 438.9
Closing shareholders’ funds 562.0 472.9 40 DS Smith Plc Annual Report 2004
BALANCE SHEETS
Group Company
30 April 30 April 30 April 30 April
2004 2003 2004 2003
Note £m £m £m £m
Fixed assets
Intangible assets 12 185.6 49.0 – –
Tangible assets 13 568.5 560.9 0.5 0.8
Investments 15 31.0 29.0 744.2 572.0
785.1 638.9 744.7 572.8
Current assets
Stocks 16 154.9 155.2 – –
Debtors: amounts falling due within one year 17 345.1 327.5 45.3 101.2
Debtors: amounts falling due after more than one year 17 16.4 6.8 474.9 413.5
Short-term investments 19 20.8 26.7 – –
Cash at bank and in hand 19 40.8 27.7 – –
578.0 543.9 520.2 514.7
Creditors: amounts falling due within one year
Trade and other creditors 18 (361.5) (355.9) (65.3) (34.6)
Borrowings 18,19 (39.7) (142.7) (44.4) (157.6)
Net current assets 176.8 45.3 410.5 322.5
Total assets less current liabilities 961.9 684.2 1,155.2 895.3
Creditors: amounts falling due after more than one year
Borrowings 18,19 (296.6) (114.0) (527.0) (322.3)
Other 18 (2.4) (2.7) – –
Provisions for liabilities and charges 23 (95.1) (87.9) (6.9) (3.5)
567.8 479.6 621.3 569.5
Minority interests – equity (5.8) (6.7) – –
Net assets 562.0 472.9 621.3 569.5
Capital and reserves
Called up share capital 24 38.7 32.2 38.7 32.2
Share premium account 26 254.6 188.9 254.6 188.9
Revaluation reserve 26 8.5 8.8 – –
Acquisition reserve 26 – – 88.1 88.1
Capital reserve 26 – – 50.0 50.0
Proﬁt and loss account 26 260.2 243.0 189.9 210.3
Shareholders’ funds – equity 562.0 472.9 621.3 569.5
Approved by the Board on 23 June 2004 and signed on its behalf by
A D Thorne, Director
G M Morris, Director
The notes on pages 42 to 62 form part of these accounts. DS Smith Plc Annual Report 2004 41
GROUP CASH FLOW STATEMENT
For the year ended 30 April 2004
2004 2004 2003 2003
Note £m £m £m £m
Net cash inﬂow from operating activities 27a 131.8 142.0
Returns on investments and servicing of ﬁnance
Net interest paid (9.8) (7.3)
Interest element of ﬁnance leases (0.2) (0.2)
Net cash outﬂow from returns on investments and servicing of ﬁnance (10.0) (7.5)
Taxation
UK corporation and overseas tax paid (17.9) (15.1)
Capital expenditure and investments
Purchase of tangible ﬁxed assets (51.7) (63.4)
Sale of tangible ﬁxed assets 9.1 4.2
Purchase of holding company shares (1.0) (0.8)
Purchase of ﬁxed asset investments – (0.1)
Sale of ﬁxed asset investments 1.7 0.6
Net cash outﬂow from capital expenditure and investments (41.9) (59.5)
Acquisitions and disposals
Purchase of subsidiary undertakings 29 (182.2) (19.6)
Net cash/(overdrafts) acquired 9.0 (0.5)
Deferred consideration paid in relation to prior year acquisitions (9.0) –
Purchase of associated undertakings (1.0) –
Sale of associated undertakings 0.8 –
Disposal of businesses 29 0.8 4.0
Net cash outﬂow from acquisitions and disposals (181.6) (16.1)
Equity dividends paid (28.2) (28.2)
Net cash (outﬂow)/inﬂow before use of liquid resources and ﬁnancing (147.8) 15.6
Management of liquid resources 27b 4.3 (8.4)
Financing
Issue of ordinary shares 74.1 0.3
Rights issue costs (1.9) –
Increase/(decrease) in debt and lease ﬁnancing 96.3 (29.9)
Net cash inﬂow/(outﬂow) from ﬁnancing 168.5 (29.6)
Increase/(decrease) in cash in the year 25.0 (22.4)
Reconciliation of net cash ﬂow to movement in net debt
Increase/(decrease) in cash in the ﬁnancial year 25.0 (22.4)
(Increase)/decrease in debt and lease ﬁnancing (96.3) 29.9
(Decrease)/increase in liquid resources (4.3) 8.4
(Increase)/decrease in net debt resulting from cash ﬂow (75.6) 15.9
Loans and ﬁnance leases acquired with subsidiary undertakings (0.5) (2.0)
Exchange differences 3.7 (20.3)
Increase in net debt in the ﬁnancial year (72.4) (6.4)
Opening net debt (202.3) (195.9) 
Closing net debt 19a, 28 (274.7) (202.3)
The notes on pages 42 to 62 form part of these accounts. 42 DS Smith Plc Annual Report 2004
ACCOUNTING POLICIES
A summary of the principal accounting
policies, which have been applied
consistently, is set out below: 
(a) Accounting basis
The ﬁnancial statements are prepared in
accordance with applicable accounting
standards, and under the historical cost
convention except that certain freehold 
and long leasehold land and buildings 
are included at valuation. 
(b) Basis of consolidation
The consolidated ﬁnancial statements
include the accounts of the Company and
all its subsidiary undertakings for the year
ended 30 April 2004. The results of
subsidiary undertakings acquired or
disposed of in the year are included in 
the consolidated proﬁt and loss account
from the date of acquisition or to the date
of disposal. The acquisition method of
accounting has been adopted for all
companies purchased during the year.
An associate is an undertaking in which
the Group has a long-term interest, usually
from 20% to 50% of the equity voting
rights, and over which it exercises
signiﬁcant inﬂuence. The Group’s share 
of the proﬁts less losses of associates is
included in the consolidated proﬁt and loss
account and its interest in their net assets,
less permanent diminution in value, is
included in investments in the consolidated
balance sheet.
(c) Goodwill and intangibles
Goodwill arising on acquisitions
(representing the excess of fair value of 
the consideration given and associated
costs over the fair value of the net assets
acquired) completed after 2 May 1998 is
capitalised and amortised on a straight-line
basis over its expected useful economic
life, not exceeding 20 years. As permitted
by FRS 10, goodwill arising on acquisitions
prior to 2 May 1998 which had already
been written off to reserves has not been
reinstated on the balance sheet. If a
business is subsequently sold or closed,
any goodwill that has not been amortised
through the proﬁt and loss account is
included in calculating the proﬁt or loss on
sale or closure. Where negative goodwill
arises it is amortised over the expected life
of the assets to which it relates.
Other material intangible assets acquired
are capitalised at cost and written off on a
straight-line basis over their estimated useful
economic lives, not exceeding 20 years.
(d) Tangible ﬁxed assets
Tangible ﬁxed assets are stated at cost,
except that, as allowed under FRS 15
‘Tangible Fixed Assets’, on adoption of 
this standard the book amounts of revalued
land and buildings were retained. These
book values are based on the previous
revaluation in 1995 and have not
subsequently been revalued. Depreciation
is calculated to write off the cost or
valuation less the estimated residual value
of all tangible ﬁxed assets in equal annual
instalments over their estimated useful lives
at the following rates:
Plant, machinery, 
ﬁxtures and ﬁttings 5-33
1
/
3
% pa
Motor vehicles 20-33
1
/
3
% pa
Freehold and long 
leasehold properties 2-10% pa
Freehold land and assets in the course 
of construction are not depreciated.
(e) Fixed asset investments
Fixed asset investments are valued at cost
less provisions for impairment.
(f) Stocks and work in progress
Stocks and work in progress are valued at
the lower of cost and net realisable value.
(g) Deferred taxation
In accordance with FRS 19, deferred tax 
is provided in full on timing differences 
that result in an obligation at the balance
sheet date to pay more tax, or a right to
pay less tax, at a future date, at rates
expected to apply when they crystallise,
based on current tax rates and the law.
Timing differences arise from the inclusion
of items of income and expenditure in
taxation computations in periods different
from those in which they are included in
the ﬁnancial statements.
Deferred tax assets are recognised to the
extent that it is regarded as more likely
than not that they will be recovered.
Deferred tax assets and liabilities are 
not discounted.
(h) Foreign currencies
Monetary assets and liabilities denominated
in foreign currencies are translated at the
rates of exchange ruling at the ﬁnancial
year end. 
Proﬁts and losses of subsidiary and
associated undertakings are expressed 
in sterling at average exchange rates for
the year. The balance sheets of overseas
subsidiary undertakings, including the
Group’s share of associates’ net assets, 
are expressed in sterling at year end
exchange rates. Exchange differences
arising on the translation of opening
shareholders’ funds, together with those
arising on borrowings used to ﬁnance or
hedge investments in foreign enterprises,
are recorded as movements in reserves. 
All other exchange differences are taken
to the proﬁt and loss account. DS Smith Plc Annual Report 2004 43
(i) Turnover
Turnover represents the amount receivable for
goods and services supplied to third parties
net of value added tax and trade discounts.
(j) Research and development
Research and development expenditure 
is written off as incurred.
(k) Leasing transactions
Fixed assets acquired under a lease that
transfers substantially all the risks and
rewards of ownership to the Group are
capitalised as tangible ﬁxed assets.
Outstanding obligations due under the
leases, net of ﬁnance charges, are included
as a liability. The ﬁnance element of the
rental payments is charged to the proﬁt
and loss account over the term of the lease
in proportion to the balance outstanding. 
All other leases are operating leases and
the annual rentals are charged to the proﬁt
and loss account on a straight-line basis.
(l) Pension contributions
The Group continues to take advantage 
of the transitional arrangements of FRS 17
‘Retirement Beneﬁts’ which permit the costs,
accruals and prepayments recorded in the
ﬁnancial statements to be reported under
the requirements of SSAP 24 ‘Accounting
for Pension Costs’. This is consistent with
the basis adopted last year.
The Group operates a deﬁned beneﬁt
pension scheme for its UK employees.
Contributions to this scheme are determined
on the basis of independent actuarial
advice and the amounts charged against
proﬁt reﬂect the full actuarial cost attributable
to the ﬁnancial year. Differences arising
between the amounts charged in the proﬁt
and loss account and monies paid to 
the scheme trustees are treated as assets 
or liabilities in the balance sheet. The
pension cost of overseas pension schemes
is established by independent actuaries 
in accordance with local practice.
Provision is made in the accounts for the
beneﬁts accruing to members of unfunded
pension schemes in accordance with the
advice of independent actuaries.
Further disclosures including those required
by FRS 17 are contained within note 6.
(m) Financial instruments
The Group uses ﬁnancial instruments,
primarily interest rate and currency swaps,
only to manage interest and currency risk
associated with the Group’s underlying
business activities and the ﬁnancing of those
activities. The Group does not undertake
any trading activity in ﬁnancial instruments.
These instruments are accounted for as
hedges when designated as hedges at the
inception of the contracts and, as a result,
any gains or losses on foreign exchange
contracts are offset against any foreign
exchange gains or losses on the related
ﬁnancial assets and liabilities. Interest rate
swaps are not shown in the Group balance
sheet at the year end.
(n) Changes in presentation of 
ﬁnancial information
The Company launched a one-for-ﬁve rights
issue of 64.5 million shares at 112 pence
per share in connection with the acquisition 
of LINPAC Containers Group, which closed
on 26 March 2004. The weighted average
number of shares used in the calculation 
of earnings per share has been adjusted
for the bonus element of the rights issue.
Prior year earnings per share and dividend
per share ﬁgures have been restated
accordingly. 44 DS Smith Plc Annual Report 2004
NOTES TO THE FINANCIAL STATEMENTS
1 Analysis of Group turnover, operating proﬁt and capital employed
Group
operating
proﬁt before
exceptional
items and Group Year end Average Return on
amortisation operating Return capital capital average capital
Turnover of intangibles proﬁt on sales employed employed employed
2004 £m £m £m % £m £m %
Packaging
Paper and Corrugated Packaging 748.9 50.5 49.5 6.7% 657.4 524.1 9.6%
Plastic Packaging 208.7 15.2 12.3 7.3% 136.5 141.4 10.7%
957.6 65.7 61.8 6.9% 793.9 665.5 9.9%
Ofﬁce Products
Ofﬁce Products Wholesaling 498.8 21.7 21.6 4.4% 123.7 119.5 18.2%
Ofﬁce Products Manufacturing 48.0 1.4 1.4 2.9% 13.7 14.3 9.8%
Intra-segment (15.9) ––––––
530.9 23.1 23.0 4.4% 137.4 133.8 17.3%
Total 1,488.5 88.8 84.8 6.0% 931.3 799.3 11.1%
United Kingdom 829.4 47.3 46.4 5.7% 639.3 503.6 9.4%
Rest of World 659.1 41.5 38.4 6.3% 292.0 295.7 14.0%
Total 1,488.5 88.8 84.8 6.0% 931.3 799.3 11.1%
2003
Packaging
Paper and Corrugated Packaging 747.0 53.1 53.0 7.1% 500.6 502.9 10.6%
Plastic Packaging 195.0 14.7 12.3 7.5% 136.0 128.2 11.5%
942.0 67.8 65.3 7.2% 636.6 631.1 10.7%
Ofﬁce Products
Ofﬁce Products Wholesaling 495.6 16.2 16.1 3.3% 122.3 127.1 12.7%
Ofﬁce Products Manufacturing 59.7 4.0 4.0 6.7% 13.8 17.3 23.1%
Intra-segment (18.3) ––––––
537.0 20.2 20.1 3.8% 136.1 144.4 14.0%
Total 1,479.0 88.0 85.4 5.9% 772.7 775.5 11.3%
United Kingdom 865.5 59.7 59.7 6.9% 456.9 482.8 12.4%
Rest of World 613.5 28.3 25.7 4.6% 315.8 292.7 9.7%
Total 1,479.0 88.0 85.4 5.9% 772.7 775.5 11.3%
The operating proﬁts shown above exclude the Group’s share of operating proﬁts and losses of associated undertakings (see note 15)
and the exceptional net loss in the prior year relating to the sale of businesses shown below operating proﬁt on the face of the
consolidated proﬁt and loss account (see note 7). The prior year exceptional net loss of £8.5m arose within the Paper and Corrugated
Packaging segment. Return on sales is deﬁned as operating proﬁt before exceptional items and amortisation of intangibles divided 
by turnover. Average capital employed is the average monthly capital employed including the intangible assets on the balance sheet.
Capital employed excludes net borrowings, deferred consideration receivable/due in respect of disposals/acquisitions, corporation tax,
dividends payable, ﬁxed asset investments and minority interests. Return on average capital employed is deﬁned as operating proﬁt
before exceptional items and amortisation of intangibles divided by the average capital employed.  DS Smith Plc Annual Report 2004 45
1 Analysis of Group turnover, operating proﬁt and capital employed continued
Capital employed as shown on page 44 excludes items of a ﬁnancing nature, corporation tax balances and ﬁxed asset investments.
Year end capital employed is reconciled to Group shareholders’ funds as follows:
2004 2003
£m £m
Shareholders’ funds 562.0 472.9
Net borrowings 274.7 202.3
Deferred consideration (receivable)/payable in respect of disposals/acquisitions (0.5) 8.7
Dividends payable 21.7 19.3
Minority interests 5.8 6.7
Corporation tax creditor (net) 19.3 16.3
Deferred tax provision 79.3 75.5
Fixed asset investments (31.0) (29.0)
Year end capital employed 931.3 772.7
The geographical analysis shown on page 44 is shown by origin. The geographical analysis of turnover by destination is:
2004 2003
£m £m
United Kingdom 754.0 781.8
Continental Europe 671.4 626.8
Rest of World 63.1 70.4
1,488.5 1,479.0
2 Operating expenses
2004 2003
£m £m
Distribution costs 172.0 166.1
Administrative expenses 148.4 159.6
320.4 325.7
The administrative expenses in the year include amortisation of intangibles of £4.0m (2003: £2.6m). 46 DS Smith Plc Annual Report 2004
NOTES TO THE FINANCIAL STATEMENTS
3 Group operating proﬁt
Operating proﬁt is stated after charging the following:
2004 2003
£m £m
Depreciation – owned assets 63.3 61.1
– leased assets 1.2 1.1
Amortisation of intangibles 4.0 2.6
Hire of plant and machinery 10.7 10.3
Other operating lease rentals 9.8 10.0
Research and development 1.0 0.8
Amounts paid to KPMG Audit Plc and its associates (see below) 1.6 1.2
Auditor’s remuneration
2004 2003
UK Overseas Total UK Overseas Total
Group audit
Parent company 0.1 – 0.1 0.1 – 0.1
Other companies 0.3 0.4 0.7 0.3 0.3 0.6
0.4 0.4 0.8 0.4 0.3 0.7
Non-audit services
Tax advisory 0.1 – 0.1 0.1 0.2 0.3
Corporate services 0.5 – 0.5 0.2 – 0.2
Other assurance 0.1 0.1 0.2 –––
0.7 0.1 0.8 0.3 0.2 0.5
1.1 0.5 1.6 0.7 0.5 1.2
This note has been extended to reﬂect best practice and the comparative information has been restated accordingly.
4 Directors’ remuneration
Details of Directors’ remuneration, shareholdings and share options are contained in the Report on Remuneration on pages 28 to 34.
5 Employee information
The average number of persons employed by the Group during the year was:
2004 2003
Number Number
Production 6,996 6,977
Selling and administration 3,940 4,023
10,936 11,000
Their total remuneration was:
2004 2003
£m £m
Wages and salaries 244.3 238.9
Social security costs 35.7 34.4
Other pension costs 1.7 1.6
281.7 274.9 DS Smith Plc Annual Report 2004 47
6 Pensions
The Group operates a single funded deﬁned beneﬁt scheme in the UK, the DS Smith Group Pension Scheme. The latest formal actuarial
valuation of the Scheme was carried out by independent actuaries as at 5 April 2001, using the projected unit method. The actuaries
reviewed the methods and assumptions underlying the actuarial valuation of the Scheme and, as in previous years, a valuation basis
linked to market value was used to value investments. The principal assumptions used at 5 April 2001 were as follows:
Valuation discount rate – pre-retirement 6.6%
– post-retirement 5.6%
Rate of increase in salaries 3.9%
Pension increases 2.4%
At the valuation date, the market value of the assets of the scheme was £527.3m and the actuarial value of the assets was 117% of 
the value of accrued beneﬁts after allowing for expected future increases in earnings. The surplus of assets over past service liabilities 
is being used to suspend contributions until the results of the next triennial actuarial valuation are known, subject to the continuing
consent of the Trustee. The next triennial actuarial valuation of the Scheme will be as at 5 April 2004.
An amount of £15.8m (2003: £6.3m) in respect of the UK deﬁned beneﬁt scheme is included in debtors falling due after more than 
one year. This includes a £10.0m contribution (2003: £5.0m) to the UK deﬁned beneﬁt scheme made by the Group during the year.
The Group has also made provision for unfunded pensions for those Executive Directors whose beneﬁts under the funded Scheme are
restricted by the Inland Revenue ‘earnings cap’. The pension cost for the year has been assessed as £0.2m (2003: £0.2m) and the
balance sheet liability at 30 April 2004 as £3.5m (2003: £3.1m).
In France the Group operates a deﬁned beneﬁt scheme which is fully funded through a segregated fund.
The disclosures required under the transitional arrangements within FRS 17 ‘Retirement Beneﬁts’ have been calculated by qualiﬁed
independent actuaries based on the most recent full actuarial valuation at 5 April 2001, updated to 30 April 2004. The ﬁnancial
assumptions used were:
2004 2003 2002
% per annum % per annum % per annum
Rate of increase in salaries 4.2% 4.0% 4.1%
Rate of increase in pensions in payment and deferred pensions 2.9% 2.5% 2.6%
Inﬂation 2.9% 2.5% 2.6%
Discount rate 5.7% 5.4% 5.9%
The assets in the scheme and the expected long-term rates of return were:
2004 2003 2002
Expected rates Expected rates Expected rates
of return Market value of return Market value of return Market value
%£m %£m % £m
Equities 7.9% 342.5 7.2% 294.5 7.6% 348.9
Bonds, Gilts and Cash (Weighted average) 4.7% 147.0 4.4% 132.4 5.2% 154.1
Total market value of assets 489.5 426.9 503.0
The following amounts were measured in accordance with the requirements of FRS 17:
2004 2003
£m £m
Total market value of assets 489.5 426.9
Present value of scheme liabilities (567.6) (560.9)
Deﬁcit in the scheme (78.1) (134.0)
Related deferred tax asset 23.5 40.2
Net pension liability (54.6) (93.8)
The assumptions used by the actuary are the best estimates chosen from a range of possible actuarial assumptions which, due to the
timescales covered, may not necessarily be borne out in practice. The scheme’s assets are not intended to be realised in the short term
and their fair value may be subject to signiﬁcant change before they are realised. The present value of the scheme’s liabilities is derived
from cashﬂow projections over long time periods and thus is inherently uncertain. 48 DS Smith Plc Annual Report 2004
NOTES TO THE FINANCIAL STATEMENTS
6 Pensions continued
If these amounts had been recognised in the ﬁnancial statements, the Group’s net assets and proﬁt and loss account reserve 
at 30 April 2004 would have been as follows:
2004 2003
£m £m
Net assets 562.0 472.9
SSAP 24 prepayments and liabilities (15.1) (5.1)
Pension liability (54.6) (93.8)
Net assets including pension liability 492.3 374.0
Proﬁt and loss account reserve excluding pension liability 260.2 243.0
SSAP 24 prepayments and liabilities (15.1) (5.1)
Pension reserve (54.6) (93.8)
Proﬁt and loss account reserve including pension liability 190.5 144.1
The amount chargeable to operating proﬁt and ﬁnance income for the year ended 30 April 2004 had FRS 17 been operative 
is as follows:
2004 2003
£m £m
Operating proﬁt
Current service cost (13.3) (13.2)
Past service cost (0.1) (0.1)
Total operating charge (13.4) (13.3)
2004 2003
£m £m
History of experience gains and losses
Difference between expected and actual returns on scheme assets 39.6 (102.5)
Percentage of scheme assets 8% 24%
Experience gains and losses on scheme liabilities (0.1) 12.5
Percentage of scheme liabilities 0% 2%
Total amount recognised in Statement of Total Recognised Gains and Losses 62.5 (119.5)
Percentage of scheme liabilities 11% 21%
2004 2003
£m £m
Other ﬁnance (cost)/income
Expected return on pension scheme assets 27.1 34.4
Interest on pension scheme liabilities (30.3) (30.1)
Net return (3.2) 4.3
The amount recognised in the Statement of Total Recognised Gains and Losses (STRGL) had FRS 17 been operative is as follows:
2004 2003
£m £m
Actual return less expected return on pension scheme assets 39.6 (102.5)
Experience gains and losses arising on the scheme liabilities (0.1) 12.5
Changes in assumptions underlying present value of scheme liabilities 23.0 (29.5)
Actuarial gain/(loss) recognised in the STRGL 62.5 (119.5) DS Smith Plc Annual Report 2004 49
6 Pensions continued
The movement in the pre-tax deﬁcit during the year is as follows:
2004 2003
£m £m
Opening deﬁcit in the scheme (134.0) (10.5)
Current and past service cost (13.4) (13.3)
Cash contributions 10.0 5.0
Other ﬁnance (cost)/income (3.2) 4.3
Actuarial gain/(loss) 62.5 (119.5)
Closing deﬁcit in the scheme (78.1) (134.0)
7 Exceptional items and amortisation of intangibles
2004 2003
£m £m
Net loss on sale of businesses – (8.5)
Amortisation of intangibles (see note 12) (4.0) (2.6)
Amortisation of negative goodwill of associates 0.4 0.4
(3.6) (10.7)
Tax on exceptional items – –
Total (3.6) (10.7)
The loss on sale of businesses in the prior year includes £7.4m of goodwill previously written off to reserves. 
8 Net interest payable and other similar items
2004 2003
£m £m
Interest payable and similar charges
– on bank loans and overdrafts (12.5) (12.4)
– on other loans (0.4) (3.1)
– on ﬁnance leases (0.2) (0.2)
– hyperinﬂationary net monetary (loss)/gain (0.1) 1.6
(13.2) (14.1)
Interest receivable and similar income 2.8 3.2
(10.4) (10.9) 50 DS Smith Plc Annual Report 2004
NOTES TO THE FINANCIAL STATEMENTS
9 Taxation
(a) Analysis of charge in the period:
2004 2003
£m £m
UK corporation tax – current year 4.4 10.7
UK corporation tax – prior years – (1.6)
Overseas taxation 17.2 11.4
Total current tax 21.6 20.5
Deferred tax – timing differences 0.4 1.1
Tax charge 22.0 21.6
Effective tax rate 28.3% 31.3%
Effective tax rate before exceptional items and amortisation of intangibles 27.0% 27.1%
(b) Factors affecting current tax charge for the year:
The tax assessed for the year is lower than the standard rate of corporation tax in the UK of 30% (2003: 30%). The differences 
are explained below:
2004 2003
£m £m
Proﬁt before tax 77.8 69.0
Tax on proﬁt at 30% (2003: 30%) 23.3 20.7
Effects of:
Depreciation for period in excess of capital allowances, and other timing differences (2.9) (3.6)
Permanent differences 1.3 3.8
Overseas tax rates 2.2 1.8
Prior year charge/(credit) 0.4 (1.6)
Other (2.7) (0.6)
Current tax charge for the year 21.6 20.5
(c) Factors that may affect future tax charges:
In future years, the Group’s tax charge will be affected by the proportion of proﬁts earned in the various countries in which the Group
operates, movements in currently unrecognised deferred tax assets, the most signiﬁcant of which relate to tax losses, and the extent to
which any capital gains can be either rolled over or sheltered by capital losses.
10 Dividends paid and proposed
2004 2003 2004 2003
Per share Per share £m £m
Interim paid 2.8p 2.8p 8.9 8.9
Final proposed/paid 5.6p 6.0p 21.7 19.3
8.4p 8.8p 30.6 28.2
The prior year dividend per share and current interim dividend per share are stated as paid. These have not been restated for the 
bonus element in the rights issue. Historic dividends per share have been restated in the Five Year Financial Summary on page 63. DS Smith Plc Annual Report 2004 51
11 Earnings per share
Basic earnings per share are calculated by dividing the proﬁt for the ﬁnancial year of £55.2m (2003: £47.1m) by the weighted
average number of shares in issue and fully paid during the year of 348.2m (2003: 343.4m). The number of shares excludes 
the weighted average number of the Company’s own shares on the Group’s balance sheet during the year (see note 15) of 1.5m
(2003: 1.1m). The weighted average number of shares has been adjusted for the bonus element of the rights issue, which closed 
on 26 March 2004. Figures for the prior year have been restated accordingly.
The Directors believe that the presentation of an adjusted earnings per share, being the basic earnings per share adjusted for
exceptional items and amortisation of intangibles, helps to explain the underlying performance of the Group. A reconciliation 
of basic to adjusted earnings per share is as follows:
2004 2003
Pence Pence
£m per share £m per share
Basic earnings 55.2 15.9 47.1 13.7
Exceptional items and amortisation of intangibles (after tax):
Amortisation of intangibles, and goodwill relating to associates 3.6 1.0 2.2 0.6
Net loss on sale of businesses –– 8.5 2.5
Adjusted earnings 58.8 16.9 57.8 16.8
In calculating diluted earnings per share there are no adjustments to earnings, but the weighted average number of shares denominator
is adjusted as follows:
Number of shares in issue
2004 2003
Millions Millions
Basic weighted average 348.2 343.4
Potentially dilutive shares issuable under share option schemes 0.8 0.2
Estimated vesting of Long-Term Incentive Plan shares 1.1 1.2
Diluted weighted average 350.1 344.8
12 Intangible assets
Positive Negative Other
goodwill goodwill intangibles Total
£m £m £m £m
Cost:
At 1 May 2003 47.7 (2.0) 11.7 57.4
Arising on acquisitions (see note 29) 142.7 – – 142.7
Disposals (see note 29) (0.5) – – (0.5)
Exchange differences (1.8) – – (1.8)
At 30 April 2004 188.1 (2.0) 11.7 197.8
Amortisation:
At 1 May 2003 7.2 (0.1) 1.3 8.4
Amortisation charge for the year 3.5 (0.1) 0.6 4.0
Disposals (see note 29) (0.2) – – (0.2)
At 30 April 2004 10.5 (0.2) 1.9 12.2
Net book value:
At 30 April 2004 177.6 (1.8) 9.8 185.6
At 30 April 2003 40.5 (1.9) 10.4 49.0
The goodwill arising on acquisitions in the ﬁnancial year ended 30 April 2004 is being amortised over its estimated useful life up to a
maximum of 20 years. Goodwill arising on the acquisition of associate undertakings is shown within ﬁxed asset investments in note 15.
The amount arising on acquisitions includes an increase in goodwill of £0.5m relating to acquisitions completed in previous years. 52 DS Smith Plc Annual Report 2004
NOTES TO THE FINANCIAL STATEMENTS
13 Tangible ﬁxed assets
Group Company
Payments
on account
and assets
Land and buildings
Plant and in course of Plant and
Freehold Leasehold machinery construction Total machinery
£m £m £m £m £m £m
Cost or valuation:
At 1 May 2003 205.8 14.3 896.6 28.4 1,145.1 2.9
Exchange differences (2.0) – (11.3) (0.4) (13.7) –
Acquisitions 27.7 2.3 100.5 1.0 131.5 –
Capital expenditure 1.1 – 32.9 15.8 49.8 –
Disposals (3.4) (0.4) (14.7) – (18.5) –
Sale of businesses (0.2) (0.1) (0.2) – (0.5) –
Transfers 11.6 (0.4) 19.3 (30.5) – –
At 30 April 2004 240.6 15.7 1,023.1 14.3 1,293.7 2.9
Accumulated depreciation:
At 1 May 2003 32.0 7.3 544.9 – 584.2 2.1
Exchange differences (0.3) – (6.4) – (6.7) –
Acquisitions 12.0 1.1 83.7 – 96.8 –
Charge for the ﬁnancial year 4.9 0.5 59.1 – 64.5 0.3
Disposals (0.1)(0.3)(13.0)–(13.4)–
Sale of businesses – – (0.2) – (0.2) –
At 30 April 2004 48.5 8.6 668.1 – 725.2 2.4
Net book value:
At 30 April 2004 192.1 7.1 355.0 14.3 568.5 0.5
At 30 April 2003 173.8 7.0 351.7 28.4 560.9 0.8
Freehold land amounting to £53.1m (2003: £55.0m) has not been depreciated. Substantially all the Group’s leasehold land and
buildings are long leasehold.
Tangible ﬁxed assets are stated at cost to the Group with the exception of certain freehold and leasehold land and buildings which 
are included at valuation as follows:
Freehold Leasehold
2004 2003 2004 2003
£m £m £m £m
Net book value:
Professionally valued in 1995 75.6 86.6 3.2 4.0
At cost 116.5 87.2 3.9 3.0
192.1 173.8 7.1 7.0
Included in plant and machinery are leased assets with a cost of £24.5m (2003: £24.6m) and a net book value of £6.6m 
(2003: £7.9m). DS Smith Plc Annual Report 2004 53
14 Capital commitments
2004 2003
£m £m
Future capital expenditure for which contracts have been placed 4.3 7.3
15 Fixed asset investments
Group Company
Negative
goodwill Shares in
Associated on associated Other Group
undertakings undertakings investments Total undertakings Other Total
£m £m £m £m £m £m £m
At 1 May 2003 22.4 (7.4) 14.0 29.0 569.0 3.0 572.0
Additions 1.0 – 1.0 2.0 175.8 1.0 176.8
Share of retained proﬁts 2.5 – – 2.5–––
Amortisation of goodwill – 0.4 – 0.4–––
Disposals (0.8) – (2.0) (2.8) (0.6) (0.3) (0.9)
Exchange differences (0.1) – – (0.1) (3.7) – (3.7)
At 30 April 2004 25.0 (7.0) 13.0 31.0 740.5 3.7 744.2
The principal associated undertakings are:
Principal country Financial Group
Nature of business of operation year end Issued capital share %
OJSC Rubezhansk Paper Manufacturer of Ukraine 31 December 17,721,000 shares 39%*
and Packaging Mill paper and packaging of UAH 1.50 each
Grovehurst Energy Ltd Provision of energy England 31 December 100 shares 50%*
and other services of £1 each
Tri-Wall KK Supplier of industrial Japan 31 March 7,515 shares of 40%*
packaging and heavy Yen 5,000 each
duty corrugated cases
Foresco Golfkarton NV Fabricator of Belgium 31 December 39,000 shares of 35%*
corrugated cases 24.79 each
*Indirectly held.
Other ﬁxed asset investments include £2.4m (2003: £1.7m) of DS Smith Plc shares. The Group operates a General Employee Beneﬁt
Trust which acquires shares in the Company to satisfy the requirements of the DS Smith Plc Long-Term Incentive Plan (the Plan). At 
30 April 2004 the Trust held 1.7m shares (2003: 1.2m shares). The market value of the shares at 30 April 2004 was £2.9m (2003:
£1.9m). Dividends receivable on the shares owned by the Trust have been waived. For further details of the Plan see the Report on
Remuneration on pages 28 to 34.
16 Stocks
2004 2003
£m £m
Raw materials and consumables 48.8 47.0
Work in progress 4.5 3.8
Finished goods 101.6 104.4
154.9 155.2 54 DS Smith Plc Annual Report 2004
NOTES TO THE FINANCIAL STATEMENTS
17 Debtors
Group Company
2004 2003 2004 2003
£m £m £m £m
(a) Amounts falling due within one year:
Trade debtors 312.1 299.4 – –
Amounts owed by subsidiary undertakings – – 40.3 100.7
Amounts owed by associated undertakings 0.1 0.1 – –
Corporation tax 1.1 1.2 – –
Other tax and social security 4.5 6.0 – –
Other debtors 14.1 10.6 4.9 0.4
Prepayments and accrued income 13.2 10.2 0.1 0.1
345.1 327.5 45.3 101.2
(b) Amounts falling due after more than one year:
Pensions 15.8 6.3 15.0 5.0
Amounts owed by subsidiary undertakings – – 459.9 407.2
Deferred tax asset – – – 1.1
Other debtors 0.6 0.5 – 0.2
16.4 6.8 474.9 413.5
Total debtors 361.5 334.3 520.2 514.7
18 Creditors
Group Company
2004 2003 2004 2003
£m £m £m £m
(a) Trade and other creditors falling due within one year:
Trade creditors 207.4 208.5 – –
Bills of exchange 21.3 19.6 – –
Amounts owed to subsidiary undertakings – – 27.9 3.4
Corporation tax 20.4 17.5 – –
Other taxes and social security 23.8 18.8 0.8 0.3
Accruals and deferred income 66.9 63.6 14.9 11.6
Deferred consideration due in respect of acquisitions – 8.6 – –
Proposed dividend 21.7 19.3 21.7 19.3
361.5 355.9 65.3 34.6
(b) Borrowings falling due within one year:
Bank loans and overdrafts 38.4 140.9 44.4 157.6
Other loans 0.3 0.8 – –
Finance leases 1.0 1.0 – –
39.7 142.7 44.4 157.6
(c) Borrowings falling due after more than one year:
Bank loans 199.3 12.2 187.1 –
Loans from subsidiary undertakings – – 246.0 225.2
Other loans 94.5 97.9 93.9 97.1
Finance leases 2.8 3.9 – –
296.6 114.0 527.0 322.3
(d) Other creditors due after more than one year:
Deferred consideration due in respect of acquisitions – 0.1 – –
Other 2.4 2.6 – –
2.4 2.7 – –
Total creditors 700.2 615.3 636.7 514.5 DS Smith Plc Annual Report 2004 55
19 Financial assets and liabilities (see also note 20)
2004 2003
Book value Fair value Book value Fair value
£m £m £m £m
(a) The Group’s net borrowings are:
Bank loans and overdrafts and other loans 332.5 326.1 251.8 249.0
Finance lease liabilities 3.8 3.8 4.9 4.9
Short-term investments (see note 27(b)) (20.8) (20.8) (26.7) (26.7)
Cash at bank and in hand (40.8) (40.8) (27.7) (27.7)
274.7 268.3 202.3 199.5
Gearing (net borrowings expressed as a percentage of shareholders’ funds) 48.9% N/A 42.8% N/A
2004 2003
£m £m
(b) Bank loans and overdrafts and other loans are repayable as follows:
Due within one year 38.7 141.7
Due between one and two years 89.6 1.4
Due between two and ﬁve years 106.3 4.3
Due after ﬁve years 97.9 104.4
332.5 251.8
(c) Analysis of ﬁnance lease liabilities:
Due within one year 1.0 1.0
Due between one and two years 0.9 1.0
Due between two and ﬁve years 1.2 1.7
Due after ﬁve years 0.7 1.2
3.8 4.9
Lease payments:
Due within one year 1.2 1.3
Due after one year 3.3 4.6
4.5 5.9
Finance charges (0.7) (1.0)
3.8 4.9
Obligations under ﬁnance leases are secured on the assets to which they relate.
2004 2003
Book value Fair value Book value Fair value
£m £m £m £m
(d) The Group’s exposure to derivative ﬁnancial instruments 
may be summarised as follows:
Derivatives held to:
Hedge future transactions (0.1) – (5.6) (5.7)
Manage the interest rate and currency exposure of borrowings – (10.0) – (4.8)
Net liability (0.1) (10.0) (5.6) (10.5)
Forward foreign exchange contracts have been taken to hedge contractual commitments for the purchase of capital equipment and raw
materials and to hedge sales in foreign currencies. All of these contracts will have matured by April 2005. During the year, the Group
entered into 5-year interest rate swap transactions in order to manage the interest rate exposure on sterling borrowings. During the prior
year, the Group entered into 10-year currency and interest rate swap transactions in order to manage the interest rate and currency
exposure arising from the Group’s private placement (see note 20).
The fair value of derivative ﬁnancial instruments has been determined on the basis of third party valuations. 56 DS Smith Plc Annual Report 2004
NOTES TO THE FINANCIAL STATEMENTS
20 Interest and currency proﬁle of net borrowings
An explanation of the Group’s treasury policy is included in the Financial Review on pages 18 to 21. Short-term debtors and creditors
have been omitted from the disclosures presented below. The currency and interest rate exposure of the Group’s net borrowings was:
Sterling Euro Other Total
£m £m £m £m
At 30 April 2004
Borrowings:
Floating rate 105.1 168.0 18.7 291.8
Fixed rate 43.3 0.5 0.7 44.5
148.4 168.5 19.4 336.3
Cash and short-term investments
Floating rate (10.8) (19.9) (13.5) (44.2)
Fixed rate – (11.5) (5.9) (17.4)
(10.8) (31.4) (19.4) (61.6)
Net borrowings at 30 April 2004 137.6 137.1 – 274.7
At 30 April 2003
Borrowings:
Floating rate 37.1 195.5 22.8 255.4
Fixed rate 0.2 1.0 0.1 1.3
37.3 196.5 22.9 256.7
Cash and short-term investments:
Floating rate (5.0) (21.2) (21.1) (47.3)
Fixed rate (0.7) (5.7) (0.7) (7.1)
(5.7) (26.9) (21.8) (54.4)
Net borrowings at 30 April 2003 31.6 169.6 1.1 202.3
At 30 April 2004 50% of the Group’s borrowings were denominated in euros in order to hedge the underlying assets of the Group’s
relevant continental European operations.
Interest rates on ﬂoating rate borrowings are based on LIBOR, EURIBOR or base rates. Fixed rate borrowings comprise mortgages,
ﬁnance leases and borrowings ﬁxed by interest rate swaps.
Currently the Group has a series of bilateral revolving credit facilities totalling £325m, of which £50m expires in May 2006, £75m 
in September 2007, £125m in May 2008 and £75m in May 2009. At 30 April 2004 the Group’s bilateral revolving credit facilities
totalled £290m. Advances drawn down under these facilities bear interest at margins over LIBOR. The acquisition of LINPAC Containers
Group was partly ﬁnanced by a facility of £140m provided by The Royal Bank of Scotland plc, which expires in September 2005. 
At 30 April 2004 £69m was drawn under this facility.
The Group has entered into a note purchase agreement with a number of institutions that have purchased US$105m of 6.24% senior
notes and £25m of 6.85% senior notes issued in 2002. The notes will mature on 14 November 2012. The Group entered into a swap
transaction with a bank counterparty under which it made a payment of US$80m in return for an equivalent amount denominated in
euros. The swap counterparty also agreed to pay ﬁxed rate dollar interest of 6.24% per annum in exchange for ﬂoating euro rate interest
at rates linked to EURIBOR. The proceeds of the swap, €81.6m, or £55.2m at rates prevailing on 30 April 2004, are shown as bank
loans due after ﬁve years. In addition, swap counterparties also agreed to pay ﬁxed rate dollar interest of 6.24% on a principal amount
of $25m in exchange for ﬂoating dollar interest linked to dollar LIBOR and ﬁxed rate sterling interest of 6.85% on a principal of £25m
in exchange for ﬂoating sterling interest linked to sterling LIBOR. DS Smith Plc Annual Report 2004 57
20 Interest and currency proﬁle of net borrowings continued
Of the total borrowing facilities available to the Group, the undrawn committed facilities available at 30 April 2004 were as follows:
2004 2003
£m £m
Expiring within one year 10.5 53.1
Expiring between one and two years 25.2 10.9
Expiring between two and ﬁve years 165.1 125.0
Expiring in more than ﬁve years 0.9 165.9
201.7 354.9
Bank loans, other loans and overdrafts of certain subsidiaries of £13.9m are secured over the assets of these companies.
21 Currency analysis of net assets
2004 2003
Net assets Net assets
excluding excluding
gross Gross gross Gross
borrowings borrowings Net assets borrowings borrowings Net assets
£m £m £m £m £m £m
Sterling 601.3 (148.4) 452.9 407.2 (37.3) 369.9
Euro 262.8 (168.5) 94.3 274.1 (196.5) 77.6
Other 34.2 (19.4) 14.8 48.3 (22.9) 25.4
898.3 (336.3) 562.0 729.6 (256.7) 472.9
Currency exposures giving rise to currency gains and losses in the Group’s proﬁt and loss account are not material.
22 Other ﬁnancial commitments
Annual commitments under non-cancellable operating leases are as follows:
Land and buildings Plant and machinery
2004 2003 2004 2003
£m £m £m £m
Expiring within one year 1.4 0.9 1.2 1.9
Expiring between one and ﬁve years 4.4 3.9 5.4 5.1
Expiring after ﬁve years 7.8 7.0 4.5 1.3
13.6 11.8 11.1 8.3 58 DS Smith Plc Annual Report 2004
NOTES TO THE FINANCIAL STATEMENTS
23 Provisions for liabilities and charges
Group Company
Deferred Deferred
taxation Pensions Other Total taxation Pensions Other Total
£m £m £m £m £m £m £m
At 1 May 2003 75.5 5.7 6.7 87.9 – 3.3 0.2 3.5
Acquired 3.4 – 4.5 7.9 ––––
Provided 0.4 0.6 0.9 1.9 3.2 0.3 – 3.5
Utilised – (0.8) (1.6) (2.4) – (0.1) – (0.1)
Exchange differences – – (0.2) (0.2) ––––
At 30 April 2004 79.3 5.5 10.3 95.1 3.2 3.5 0.2 6.9
Other provisions mainly relate to reorganisation and redundancy costs and provisions for vacant leasehold properties. Provisions relating
to reorganisation and redundancy costs are expected to be utilised during the next year.
Deferred taxation is analysed as follows:
2004 2003
£m £m
Accelerated capital allowances 67.3 68.7
Other timing differences 12.0 6.8
79.3 75.5
The analysis of deferred taxation excludes additional taxation payable:
(i) on capital gains which may arise if land and buildings were sold for the amounts at which they are carried in the Group’s balance
sheet as, in the opinion of the Directors, such properties will be retained for use in the business or, if sold, would be replaced by
similar assets; and
(ii) in the event of the proﬁts of overseas subsidiary undertakings being distributed where there is no intention to make such distributions.
24 Share capital
Number of shares
2004 2003 2004 2003
Millions Millions £m £m
Ordinary equity shares of 10 pence each:
Authorised 410.0 410.0 41.0 41.0
Issued, allotted, called up and fully paid 387.3 321.5 38.7 32.2
Shares issued during the year to 30 April 2004 and the consideration received were:
Allotted, called up and fully paid
Nominal Share Total
Value premium consideration
‘000 £’000 £’000 £’000
Reason for issue:
Rights issue (net of issue costs of £1.9m) 64,541 6,454 63,967 70,421
Executive options (note 25) 792 79 1,102 1,181
Savings Related Option Scheme (note 25) 416 42 574 616
A total of 64.5 million shares were issued at 112.0 pence per share as part of the one-for-ﬁve rights issue in connection with the
acquisition of LINPAC Containers Group, which closed on 26 March 2004. DS Smith Plc Annual Report 2004 59
25 Share options
During the year ended 30 April 2004, the following options were granted:
Number of shares Option price (range) Date exercisable
Executive Share Option Scheme (1999) 2,010,970 148.7p – 149.2p July 2006 – December 2013
At 30 April 2004, the following options were outstanding:
Number of shares Option price (range) Date exercisable
Executive Share Option Scheme (1992) 3,805,498 164.8p – 306.3p August 1997 – July 2009
Executive Share Option Scheme (1999) 6,704,428 135.2p – 159.9p October 2003 – July 2013
1999 Savings Related Option Scheme 2,762,540 138.1p – 160.9p January 2004 – June 2005
Following the one-for-ﬁve rights issue in connection with the acquisition of LINPAC Containers Group the exercise price and the number
of shares under option have been adjusted to maintain the option holders’ interests. During the year, awards totalling 601,493 shares
were made to participating executives under the Long-Term Incentive Plan (the Plan). Following the one-for-ﬁve rights issue an additional
86,010 shares were acquired on behalf of participating executives within the Plan. At 30 April 2004, the total number of shares
awarded and held in trust to satisfy obligations under the Plan was 1,352,315 (2003: 848,532).
26 Reserves
Share Proﬁt
premium Revaluation and loss
account reserve account
Group £m £m £m
At 1 May 2003 188.9 8.8 243.0
Premium arising on shares issued under option schemes 1.7 – –
Proceeds of rights issue (net of issue costs of £1.9m) 64.0 – –
Retained proﬁt for the ﬁnancial year – – 24.6
Transfer – (0.3) 0.3
Exchange differences – – (7.7)
At 30 April 2004 254.6 8.5 260.2
Exchange differences include an exchange gain of £3.7m (2003: loss of £20.3m) on foreign currency borrowings, offset by gains
arising on the Group’s equity investment in foreign subsidiary and associated undertakings. At 30 April 2004, the cumulative goodwill
written off against the proﬁt and loss account reserve for businesses acquired prior to 2 May 1998 was £156.0m (2003: £156.0m).
Share
premium Acquisition Capital Proﬁt and
account reserve reserve loss account
Company £m £m £m £m
At 1 May 2003 188.9 88.1 50.0 210.3
Premium arising on shares issued under option schemes 1.7–––
Proceeds of rights issue (net of issue costs of £1.9m) 64.0–––
Retained loss for the ﬁnancial year – – – (20.4)
At 30 April 2004 254.6 88.1 50.0 189.9
No separate proﬁt and loss account is presented for the Company as permitted by Section 230(4) of the Companies Act 1985.
The Company made a proﬁt for the ﬁnancial year of £10.2m (2003: £52.6m).
The Company’s proﬁt and loss account includes an amount of £126.6m (2003: £126.6m) which is considered non-distributable. 60 DS Smith Plc Annual Report 2004
NOTES TO THE FINANCIAL STATEMENTS
27 Group cash ﬂow statement
2004 2003
£m £m
(a) Reconciliation of operating proﬁt to net cash inﬂow from operating activities:
Operating proﬁt before exceptional items and amortisation of intangibles 88.8 88.0
Depreciation 64.5 62.2
Proﬁt on sale of tangible ﬁxed assets (4.0) (0.4)
Decrease/(increase) in stocks 2.7 (5.3)
(Increase)/decrease in debtors (3.0) 1.6
Decrease in creditors (16.7) (2.3)
Decrease in provisions (0.9) (3.3)
Other non cash operating items 0.4 1.5
Net cash inﬂow from operating activities 131.8 142.0
(b) Net sale/(purchase) of short-term investments 4.3 (8.4)
Short-term investments mainly comprise deposits with banks.
28 Analysis of changes in net debt
At 30 April Exchange At 30 April
2003 Acquired Cash ﬂow movements 2004
£m £m £m £m £m
Cash at bank and in hand 27.7 – 15.4 (2.3) 40.8
Overdrafts (39.8) – 9.6 0.4 (29.8)
(12.1) – 25.0 (1.9) 11.0
Debt due after one year (110.1) – (187.0) 3.3 (293.8)
Debt due within one year (101.9) (0.5) 89.7 3.8 (8.9)
Finance leases (4.9) – 1.0 0.1 (3.8)
(216.9) (0.5) (96.3) 7.2 (306.5)
Short-term investments 26.7 – (4.3) (1.6) 20.8
Total (202.3) (0.5) (75.6) 3.7 (274.7)
29 Acquisitions and disposals
a) Cash ﬂow:
Cash ﬂow arising on the acquisition and disposal of businesses.
2004 2003
Acquisitions Disposals Acquisitions Disposals
£m £m £m £m
Tangible ﬁxed assets (34.7) 0.3 (3.1) 3.7
Working capital (5.1) 0.2 (2.3) 2.7
Taxation 4.4 – (0.1) 0.2
Provisions 4.5 – ––
(Cash)/loans (8.5) – 2.3 (1.0)
Net assets (acquired)/disposed (39.4) 0.5 (3.2) 5.6
Minority interest (1.3) – (1.0) –
Group assets (acquired)/disposed (40.7) 0.5 (4.2) 5.6
Positive/(negative) goodwill (142.7) 0.3 (17.7) 7.4
Loss on disposal –– – (8.5)
(Acquisition)/disposal price (183.4) 0.8 (21.9) 4.5
Deferred consideration –– 0.7 (0.5)
Deferred costs 1.2 – ––
Cost of investment transferred –– 1.6 –
Cash ﬂow (182.2) 0.8 (19.6) 4.0 DS Smith Plc Annual Report 2004 61
29 Acquisitions and disposals continued
b) Fair value of acquisitions:
LINPAC Containers Group was acquired on 22 March 2004 and has been accounted for as an acquisition and consolidated in the
ﬁnancial statements from the date of acquisition. Details of this and other acquisitions during the year are summarised as follows:
Other
LINPAC Containers Group acquisitions
Accounting Total
Book policy Fair value Fair Fair fair
value adjustments adjustments value value value
£m £m £m £m £m £m
Tangible ﬁxed assets 37.3 0.2 (3.6) 33.9 0.8 34.7
Working capital 4.9 (0.9) 0.3 4.3 0.8 5.1
Taxation (4.4) – – (4.4) – (4.4)
Provisions (1.5) – (2.5) (4.0) (0.5) (4.5)
Cash/(loans) 9.0 – – 9.0 (0.5) 8.5
Net assets acquired 45.3 (0.7) (5.8) 38.8 0.6 39.4
Minority interest – 1.3 1.3
Group assets acquired 38.8 1.9 40.7
Positive goodwill arising 137.0 5.7 142.7
175.8 7.6 183.4
Satisﬁed by:
Cash consideration paid 170.7 7.5 178.2
Expenses of acquisition 5.1 0.1 5.2
Total consideration 175.8 7.6 183.4
Deferred expenses of acquisition (1.2) – (1.2)
Total cash ﬂow 174.6 7.6 182.2
The material fair value adjustments are to recognise formal valuations on acquired tangible ﬁxed assets and to bring provisioning
against stock and debtors into line with the relevant Group procedures. Fair value adjustments on other acquisitions are not signiﬁcant. 
c) Summary results of LINPAC Containers Group:
The summary proﬁt and loss account of LINPAC Containers Group for the period from 1 January 2004 to 22 March 2004, 
the effective date of acquisition, was as follows:
£m
Turnover 33.4
Operating proﬁt 2.4
Finance income 0.5
Proﬁt before taxation 2.9
Taxation (1.0)
Proﬁt for the ﬁnancial period 1.9
In the previous year from 1 January 2003 to 31 December 2003, the proﬁt after taxation of LINPAC Containers Limited was £20.7m
after an exceptional credit, net of taxation, of £6.9m.
The summarised total recognised gains and losses of LINPAC Containers Group for the period 1 January 2004 to 22 March 2004, the
effective date of acquisition, is as follows:
£m
Proﬁt for the ﬁnancial period 1.9
Dividends (56.7)
Total recognised loss for the ﬁnancial period (54.8) 62 DS Smith Plc Annual Report 2004
NOTES TO THE FINANCIAL STATEMENTS
30 Related party transactions
2004 2003
£m £m
Sales to associated undertakings on normal trading terms 1.9 1.0
Purchases from associated undertakings on normal trading terms 25.2 22.3
Amounts due from associated undertakings (including loans) 3.4 4.2
Amounts due to associated undertakings – 0.1
31 Contingent liabilities
Guarantees to third parties amount to £22.7m (2003: £19.7m). The Group and the Company has guaranteed certain future operating
commitments of its associated undertaking, Grovehurst Energy Ltd (see note 15). The Company has guaranteed the gross overdrafts and
loans of certain subsidiary undertakings which at 30 April 2004 amounted to £130.7m (2003: £123.0m). Other guarantees to third
parties amount to £5.6m (2003: £5.0m).
32 Subsidiary undertakings
The Company’s principal trading subsidiary undertakings as at 30 April 2004 are:
Percentage of issued Country of 
ordinary share capital incorporation
held by DS Smith Plc or registration
Packaging
St Regis Paper Company Ltd 100% England
DS Smith (UK) Limited 100% England
LINPAC Containers Ltd 100% England
Kaysersberg Packaging S.A.S. 100%* France
DS Smith Packaging Poland SA 98%* Poland
Toscana Ondulati SpA 65%* Italy
Çopikas AS 100%* Turkey
Cartón Plástico s.a. 100%* Spain
DW Plastics NV 100%* Belgium
Ducaplast SAS 100%* France
Demes Logistics GmbH & Co KG 100%* Germany
David S. Smith America Inc. 100%* USA
DSS Rapak Inc. 100%* USA
Rapak Asia Paciﬁc (Aust) Pty Ltd 100%* Australia
StePac L.A. Ltd 55%* Israel
Zewathener GmbH & Co KG 100%* Germany
A. A. Griggs & Co. Ltd 100%* England
Ofﬁce Products
Spicers Ltd 100%* England
Spicers (Ireland) Ltd 100%* Ireland
Spicers France SA 100%* France
John Dickinson Stationery Ltd 100% England
John Dickinson Stationery (Ireland) Ltd 100%* Ireland
*Indirectly held by DS Smith Plc.
A complete list of subsidiary companies will be included in the next annual return.
33 Post balance sheet events
On 20 May 2004, the Ofﬁce of Fair Trading announced that the acquisition of LINPAC Containers by the Group was to be referred 
to the UK Competition Commission for further inquiry. Information on this is included in the Chairman’s Statement on page 4 and the
Chief Executive’s Review on page 6.
On 1 June 2004, the Group announced that it has agreed to acquire BPB Recycling, a recovered paper collection business, from 
BPB PLC, subject to clearance from the Ofﬁce of Fair Trading.  DS Smith Plc Annual Report 2004 63
FIVE YEAR FINANCIAL SUMMARY
Year Ended Year Ended Year Ended Year Ended Year Ended
29 April 28 April 30 April 30 April 30 April
2000 2001 2002 2003 2004
£m £m £m £m £m
Turnover
Paper and Corrugated Packaging 630.4 716.9 720.5 747.0 748.9
Plastic Packaging 113.2 146.3 171.9 195.0 208.7
Packaging 743.6 863.2 892.4 942.0 957.6
Ofﬁce Products Wholesaling 419.4 485.0 500.5 495.6 498.8
Ofﬁce Products Manufacturing 74.5 71.4 66.7 59.7 48.0
Intra-segment (19.8) (20.5) (19.4) (18.3) (15.9)
Ofﬁce Products 474.1 535.9 547.8 537.0 530.9
Group Turnover 1,217.7 1,399.1 1,440.2 1,479.0 1,488.5
Operating Proﬁt
Paper and Corrugated Packaging 37.1 51.5 51.2 53.1 50.5
Plastic Packaging 8.5 8.7 12.7 14.7 15.2
Packaging 45.6 60.2 63.9 67.8 65.7
Ofﬁce Products Wholesaling 23.0 24.4 9.7 16.2 21.7
Ofﬁce Products Manufacturing (0.8) 0.3 (1.6) 4.0 1.4
Ofﬁce Products 22.2 24.7 8.1 20.2 23.1
Group Operating Proﬁt
(1)
67.8 84.9 72.0 88.0 88.8
Associated undertakings
(1)
(0.2) (0.2) 2.2 2.6 3.0
Interest
(1)
(9.9) (12.5) (11.6) (10.9) (10.4)
Proﬁt before taxation, exceptional items and amortisation of intangibles 57.7 72.2 62.6 79.7 81.4
Exceptional items (8.5) (4.3) (32.4) (8.5) –
Amortisation of intangibles (0.6) (1.1) (1.4) (2.2) (3.6)
Proﬁt before taxation 48.6 66.8 28.8 69.0 77.8
Free cash ﬂow 21.0 22.8 73.5 60.2 61.3
Capital expenditure 55.3 75.8 74.8 57.4 49.8
Depreciation 57.0 60.4 63.6 62.2 64.5
Average capital employed
(2)
692.4 743.1 783.3 775.5 799.3
Shareholders’ funds 424.5 446.2 438.9 472.9 562.0
Net borrowings 162.4 193.4 195.9 202.3 274.7
Return on sales 5.6% 6.1% 5.0% 5.9% 6.0%
Return on average capital employed 9.8% 11.4% 9.2% 11.3% 11.1%
Gearing 38.3% 43.3% 44.6% 42.8% 48.9%
Earnings per share
(1) (3)
12.5p 14.1p 13.1p 16.8p 16.9p
Dividends per share
(3)
7.9p 8.2p 8.2p 8.2p 8.2p
Dividend cover 1.6x 1.7x 1.6x 2.0x 1.9x
Net assets per share
(3)
123.4p 129.7p 127.5p 137.0p 145.2p
(1)
Before exceptional items and amortisation of intangibles
(2)
Average capital employed is deﬁned in note 1 on page 44.
(3)
Adjusted for the bonus element of the rights issue which took place during the year ended 30 April 2004. 64 DS Smith Plc Annual Report 2004
NOTICE OF ANNUAL GENERAL MEETING 2004
Notice is hereby given that the Annual General
Meeting of DS Smith Plc will be held at the Great
Eastern Hotel, Liverpool Street, London EC2M
7QN, on Friday 10 September 2004 at 12 noon to
consider and, if thought fit, pass the following
resolutions, of which resolutions 1 to 12 will be
proposed as ordinary resolutions and resolutions
13 and 14 will be proposed as special resolutions:
1 To receive and adopt the Directors’ Report, the
Auditor’s Report and financial statements for
the year ended 30 April 2004.
2 To declare a final dividend on the ordinary shares.
3 To approve the Report on Remuneration.
4 To re-elect Mr A D Thorne as a Director of the
Company.
5 To re-elect Mr R G Beeston as a Director of
the Company.
6 To re-elect Mr D R Piette as a Director 
of the Company.
7 To elect Mr C J Bunker as a Director 
of the Company.
8 To elect Mr J-P Loison as a Director 
of the Company.
9 To re-appoint KPMG Audit Plc as Auditor 
of the Company.
10 To authorise the Directors to determine the
remuneration of the Auditor.
11 That:
(a) the DS Smith Long-Term Incentive Plan
(the ‘Plan’), the main features of which are
summarised on pages 65-66, be approved and
the Directors be authorised to do all such acts
and things as they may consider necessary or
expedient to carry the Plan into effect; and
(b) the Directors be authorised to establish
such schedules to the Plan as they may
consider necessary in relation to employees 
in jurisdictions outside the UK, with such
modifications as may be necessary or desirable
to take account of local securities laws,
exchange control and tax legislation, provided
that any shares made available under such
schedules must be treated as counting against
the relevant limits on individual participation
and overall participation in the Plan.
12 That:
(a) in accordance with Article 6 of the Articles
of Association of the Company, the Directors
be authorised to allot relevant securities up to 
a maximum nominal amount of £10,844,341;
(d) the authority hereby conferred shall, 
unless previously varied, revoked or renewed,
expire on 9 March 2006 or, if earlier, at 
the conclusion of the next Annual General
Meeting of the Company, save that the
Company shall be entitled under such authority
to make at any time before the expiry thereof
any contract to purchase its ordinary shares
which will or might be concluded wholly 
or partly after the expiry of such authority.
By Order of the Board
Carolyn Cattermole
Secretary
4-16 Artillery Row
London SW1P 1RZ
14 July 2004
(b) this authority shall expire on 9 September
2009 save that the Company shall be entitled
under such authority to honour at any time
before expiry thereof any commitment to allot
its ordinary shares which will or might be
concluded wholly or partly after the expiry 
of such authority; and
(c) all previous authorities under Section 80 
of the Companies Act 1985 be revoked.
13 That:
(a) in accordance with Article 7 of the Articles
of Association of the Company, the Directors be
given power to allot equity securities for cash;
(b) for the purposes of paragraph (1)(b) of
Article 7 of the Articles of Association of the
Company, the nominal amount to which this
power is limited (other than in connection with
a rights issue) is £1,936,489; 
(c) this power shall expire on 9 September
2009 save that the Company shall be entitled
under such authority to honour at any time
before expiry thereof any commitment to allot
its ordinary shares which will or might be
concluded wholly or partly after the expiry 
of such authority; and
(d) all previous authorities under Section 95 
of the Companies Act 1985 be revoked.
14 That in accordance with Article 11 of the
Articles of Association of the Company and
the Companies Act 1985, the Company is
generally and unconditionally authorised to
make market purchases (within the meaning 
of the Companies Act 1985) of ordinary shares
of 10p each in the capital of the Company 
in such manner and on such terms as the
Directors may from time to time determine
provided that:
(a) the maximum number of ordinary shares
hereby authorised to be purchased is
38,728,840 ordinary shares;
(b) the minimum price which may be paid 
for each ordinary share is 10p (exclusive 
of expenses payable by the Company);
(c) the maximum price which may be paid
for each ordinary share is an amount equal 
to 105% of the average of the middle market
quotations for an ordinary share as derived
from the London Stock Exchange Daily
Official List for the five business days
immediately preceding the date of any such
purchase (exclusive of expenses payable by 
the Company); and  DS Smith Plc Annual Report 2004 65
Notes
(i) Only those members registered in the Register
of Members of the Company as at 6 pm on 
8 September 2004 shall be entitled to attend and
vote at the Meeting in respect of the number 
of shares registered in their names at that time.
(ii) A member entitled to attend and vote at 
the Meeting is entitled to appoint one or 
more Proxies to attend and, on a poll, to vote
instead of him. A Proxy need not be a member
of the Company.
(iii) A Form of Proxy is enclosed. To be effective,
Forms of Proxy must reach the Registrars at
the address shown on the Form not later than
48 hours before the time of the Meeting.
Completion and return of the Form will not,
however, prevent a member from attending 
and voting at the Meeting.
(iv) Copies of the Directors’ service contracts with
the Company or any of its subsidiaries, other
than contracts expiring, or terminable by the
employing company without compensation, within
one year, will be available for inspection at the
registered office of the Company during normal
business hours on any weekday (Public Holidays
excepted) and at the place of the Meeting, from
11.45am until the conclusion of the Meeting.
(v) Mr R G Beeston is Chairman of the
Remuneration Committee and a member 
of the Audit and Nomination Committees of
the Board. Mr C J Bunker is a member of the
Audit and Remuneration Committees of the
Board. Mr D R Piette is a member of the
Remuneration Committee. Mr A D Thorne 
is a member of the General Purposes and
Nomination Committees of the Board.
(vi) The Chairmen of the Audit, Remuneration and
Nomination Committees will be available to
answer relevant questions at the Meeting.
Explanatory notes on the resolutions
Resolution 1:
Report and financial statements
The Directors present to shareholders at the AGM
the Reports of the Directors and Auditor and the
financial statements of the Company for the year
ended 30 April 2004. These are contained in the
Annual Report.
Resolution 2: 
Declaration of a final dividend
Final dividends declared by shareholders must 
not exceed the amount recommended by the
Directors. By passing Resolution 2, shareholders
will declare a final dividend. The amount of the
final dividend recommended by the Directors 
is 5.6p net per ordinary share.
Resolution 3:
Approval of Report on Remuneration
As required by the Directors’ Remuneration Report
Regulations 2002, shareholder approval is sought for
the Report on Remuneration set out on pages 28 to 34.
Resolutions 4-8: 
Re-election of Directors
The Articles of Association of the Company require
that all Directors retire at least once every three
years but are eligible to submit themselves for 
re-election by the shareholders. The Directors who
retire at each AGM are those who would otherwise
have served for over three years without re-election
by the date of the following AGM.
Mr Beeston and Mr Thorne will retire and, being
eligible, offer themselves for re-election at this
year’s AGM. Mr Piette is submitting himself for 
re-election as he has served more than three terms
of appointment.
The Articles of Association of the Company require
that a Director appointed since the previous AGM
shall be subject to election by the shareholders. 
Mr Bunker and Mr Loison were appointed
Directors with effect from 9 December 2003 
and, in accordance with the Articles, they both
retire from office at the Meeting. Being eligible
they offer themselves for election.
A short biography of each Director, including 
those seeking re-election and election, appears 
on page 22 of the Annual Report. Mr Thorne 
has a service contract with the Company which
may be terminated by the Company on giving 
12 months’ written notice. Mr Loison has a 
Letter of Appointment with the Company and 
a service contract with the Company’s subsidiary,
Kaysersberg Packaging S.A.S., which may be
terminated by the Company or Kaysersberg
Packaging S.A.S. respectively on giving 
12 months’ written notice.
Resolutions 9 and 10: 
Re-appointment of Auditor
The auditor of a company must be re-appointed at
each general meeting at which accounts are presented.
Resolution 9 proposes the re-appointment of the
Company’s existing Auditor, KPMG Audit Plc, until
the next AGM. Resolution 10 gives authority to the
Directors to determine the Auditor’s remuneration.
Resolution 11:
Approval of new Long-Term Incentive Plan
The rationale for the introduction of the new 
Long-Term Incentive Plan is set out in the 
Report on Remuneration on page 29. The 
operation of the Plan will be supervised by 
the Remuneration Committee of the Board 
(the ‘Remuneration Committee’).
(a) Eligibility
The Remuneration Committee has discretion 
to grant awards under the Plan (‘Awards’) to
any employee (including an executive director) 
of the Company or any of its subsidiaries 
(the ‘Group’) who is required to devote
substantially the whole of his working time to
his employment and is not within six months
of his anticipated retirement date.
(b) Grant of Awards
Awards will be over ordinary shares in the
Company (‘Shares’). Subject to the exceptional
circumstances referred to below, their vesting
will be contingent on the satisfaction of a
specified performance target and the continued
employment of the participant with the Group.
Awards may be granted at any time within the
six-week period following the date on which
the Plan is approved by the Company in general
meeting and thereafter in any six-week period
following the announcement of the Company’s
results or at any other time when the
circumstances are considered to be exceptional
by the Remuneration Committee. No payment
is required from participants for either the
grant of an Award or when an Award vests.
An Award will not generally vest before the
specified performance target has been met at
the end of the period of three financial years
beginning with the year in which Awards are
made. The extent to which the performance
target is met will determine the number of
Shares under the Award which will vest.
(c) Performance targets
The performance target for the initial Awards
will relate to the Company’s total shareholder
return performance relative to companies in the
FTSE Mid 250 Index, excluding investment
trusts. Total shareholder return takes into
account both share price performance and
dividend payments, and will be averaged over
the two-month periods immediately before the
beginning and end of the performance period
in order to minimise the impact of short-term
price fluctuations.
The performance targets which will apply 
for Awards granted in 2004 are set out in 
the following table.
Total Shareholder Return Ranking % of Award Vesting
Upper Quartile 100%
Median 30%
Median-Upper Quartile 30%-100%
(pro rata, on a
straight-line basis)
Below Median Nil 66 DS Smith Plc Annual Report 2004
NOTICE OF ANNUAL GENERAL MEETING 2004
In addition, no Awards will vest unless the
Company’s earnings per share growth is at
least equal to the increase in the Retail Prices
Index over the performance period.
Only a single test will be made at the end of
the three year performance period, and no 
re-testing will be permitted.
Performance targets on existing awards may be
amended to ensure that they remain appropriate,
provided that the amended targets are no less
or more challenging than the initial ones.
The Remuneration Committee will regularly
monitor the continuing suitability of the
performance targets and may impose different
targets on Awards granted in subsequent years,
provided that they are no less challenging.
(d) Individual limit
No individual may receive an Award over
Shares which have an aggregate market value
when the Award is granted which is more than
100 per cent of his annual rate of basic salary.
In the event that any individual is granted both
options under the Company’s executive share
option scheme and Awards under the Plan in
the same financial year, the aggregate market
value of Shares granted under his Award for
that year will not exceed 75 per cent of his
salary, other than in exceptional circumstances
such as high level recruitment or promotion 
(in which case the 100 per cent of salary limit
will apply to his Awards).
(e) Limits on the issue of Shares under the Plan
No Award may be granted under the Plan if, as
a result, the aggregate number of Shares issued
or issuable pursuant to grants made during the
previous 10 years under the Plan and all other
executive share schemes established by the
Company would exceed 5 per cent of the issued
ordinary share capital of the Company from
time to time, or more than 10 per cent of the
issued ordinary share capital of the Company
when aggregated with grants made under all 
of the Company’s employee share schemes.
Any treasury Shares used in the Plan will
count against these limits.
The Plan may use Shares purchased in the
market and held by an employee benefit trust,
but it is not intended that such trust will hold
more than 5 per cent of the Company’s issued
ordinary share capital at any time.
(f) Vesting of Awards
An Award will normally vest on the third
anniversary of its grant date to the extent that
the applicable performance condition has been
satisfied and provided that the participant is
still an employee of the Group. However,
where a participant leaves due to:
• death; or
• injury or disability evidenced to the satisfaction
of the Remuneration Committee; or
• statutory redundancy; or
• retirement at or after contractual retirement
age or early retirement with the consent of
the Remuneration Committee; or
• the company employing the participant
ceasing to be a member of the Group, or the
business in which the participant works being
transferred to a person who is not a member
of the Group; or
• any other reason that the Remuneration
Committee in its discretion so permits;
then Awards may vest immediately. However,
the number of Shares under an Award which
vest in these circumstances will depend 
upon the extent to which the performance
targets are satisfied at that time unless 
the Remuneration Committee decides
otherwise in exceptional circumstances.
(g) Delivery of Shares on vesting
Once a participant’s Award has vested, the
relevant number of ordinary shares in the
Company will be delivered to the participant
as soon as practicable.
(h) Change of control
In the event of a takeover, reconstruction,
amalgamation or winding-up of the Company,
all subsisting Awards will vest immediately 
to the extent the performance conditions are
satisfied when measured up to the date of the
relevant event. Awards will be pro-rated to
time unless the Remuneration Committee
decides otherwise in the circumstances.
(i) Variation of share capital
In the event of any variation in the share capital
of the Company prior to the vesting of an A ward,
including a capitalisation issue, a rights issue,
a sub-division or consolidation of shares, a
reduction in capital or a demerger, the payment
of capital dividend or similar event affecting the
Company, the Remuneration Committee may
make such adjustments to the number of shares
subject to Awards as it considers appropriate.
(j) Rights relating to the Awards
Awards shall not confer the right to vote 
the Shares under them or receive any
dividends or any other rights in respect 
of those Shares until the Shares under the
Awards have been allotted or transferred 
to the participant following vesting.
Shares issued pursuant to the Plan shall rank pari
passu in all respects with the ordinary shares
already in issue except that they will not rank for
any dividend or distribution paid or made by
reference to a record date falling prior to the date
the shares are transferred to participants. 
Benefits obtained under the Plan will not be
pensionable, and Awards are not assignable or
transferable (except in the event of death,
when they may be assigned to the participant’s
personal representatives).
(k) Amending the rules of the Plan
The Remuneration Committee may amend 
the Plan provided that the prior approval 
of the Company in general meeting will be
required for any amendment to the advantage
of participants to those provisions of the Plan
relating to eligibility, the limitations on 
the number of Shares subject to the Plan, 
a participant’s maximum entitlement, the basis
for determining a participant’s entitlement
under the Plan and the adjustment of Awards in
the event of a variation in capital, except in the
case of minor amendments to benefit the
administration of the Plan, to take account of
changes in legislation or to obtain or maintain
favourable tax, exchange control or regulatory
treatment for participants or for any member of
the Group.
(l) Overseas jurisdictions
Additional schedules to the rules may be
incorporated to operate outside the UK. These
schedules may vary the rules of the Plan to
take account of any securities law, exchange
control or taxation laws or regulations. Any
shares made available under such schedules
will count against the relevant limits on
individual participation and overall
participation in the Plan.
(m) Termination
The Plan may be terminated at any time by
resolution of the Board or of the Company 
in general meeting and shall in any event
terminate on the tenth anniversary of the 
date on which the Plan is approved by the
Company in general meeting. Termination will
not affect the outstanding rights of participants.
Resolution 12:
Directors’ authority to allot shares
Authority was granted to the Directors at last year’s
AGM, pursuant to Section 80 of the Companies
Act 1985, to allot shares in the Company without
the prior consent of shareholders for a period of
five years. Resolution 12, which will be proposed
as an ordinary resolution, will, if passed, give  DS Smith Plc Annual Report 2004 67
the Directors renewed authority to allot shares up
to a maximum nominal value of £10,844,341
(representing 28 per cent of the issued share 
capital of the Company at 23 June 2004).
Other than in connection with any exercise 
of options under the Group’s employee share
option schemes, the Directors have no present
intention of exercising the allotment authority
proposed by this Resolution. The authority will
expire on 9 September 2009, except in so far as
commitments to allot shares have been entered into
before that date. It is the present intention of the
Directors to seek a similar authority annually.
Resolution 13: 
Directors’ power to disapply 
pre-emption rights
This Resolution, which will be proposed as 
a special resolution, supplements the Directors’
authority to allot shares in the Company 
(proposed by Resolution 12).
Section 89 of the Companies Act 1985 requires 
a company proposing to allot equity securities 
for cash to offer them first to existing shareholders
pro rata to their existing shareholdings. Authority
was granted to the Directors at last year’s AGM
and the Directors propose to seek shareholders’
approval to renew this authority, pursuant to
Section 95 of the Companies Act 1985, to allot
such securities, notwithstanding the requirement
imposed by Section 89, in two cases:
– in connection with a rights issue; and 
– allotments of shares for cash up to a total
nominal value of £1,936,489 (representing 
5 per cent of the Company’s issued share
capital at 23 June 2004). This gives the
Directors flexibility to take advantage of
business opportunities as they arise, whilst 
the 5 per cent limit ensures that existing
shareholders’ interests are protected, and is 
in line with guidelines issued by institutional
investors’ bodies.
This authority will expire on 9 September 2009,
except in so far as commitments to allot shares
have been entered into before that date. It is the
present intention of the Directors to seek a similar
authority annually.
Resolution 14:
Company’s authority to purchase shares
This Resolution, which will be proposed as 
a special resolution, seeks to renew the existing
authority for the Company to purchase its own shares
in the market. This authority gives the Company
greater flexibility in managing its capital resources.
The Directors have no specific intention of using
this authority and would do so only when, in the
light of market conditions, they believed that the
effect of such purchases would be to increase
earnings per share, and that the purchases were in
the interests of shareholders generally. The Directors
would also give careful consideration to gearing
levels of the Company and its general financial
position. The purchase price would be paid out of
distributable profits. Any shares purchased under
this authority will be cancelled and the number 
of shares in issue will be reduced accordingly.
Resolution 14 specifies the maximum number 
of shares which may be purchased (representing 
10 per cent of the Company’s issued share capital
at 30 April 2004), the minimum and maximum
prices at which they may be bought and when the
authority will expire, reflecting the requirements 
of the Companies Act 1985 and the Listing Rules 
of the UK Listing Authority. 
The maximum price at which the shares may be
purchased is 5 per cent above the average of the
middle market values of those shares for the five
business days before the purchase is made.
Purchases of shares under the proposed authority
are required by the UK Listing Authority to be
made in compliance with The Model Code for
securities transactions by directors of listed
companies. Accordingly, the Company would not
exercise the authority at a time when the Directors
would be precluded from dealing in the Company’s
shares. Specifically, purchases would not be made
within the two months preceding the announcement
of the interim or final results. This proposal should
not be taken as an indication that the Company
would purchase shares at any particular price or 
to imply any opinion on the part of the Directors 
as to the market or other value of the Company’s
ordinary shares.
The total number of ordinary shares that are under
option through the Company’s share option schemes
at 23 June 2004 (being the latest practicable date
prior to publication of this notice) is 13,248,235 
of which 11,968,775 are options over unissued
ordinary shares. The proportion of issued ordinary
share capital that the options over unissued
ordinary shares represented on this date was 3.09%
and the proportion of issued ordinary share capital
that they will represent if the full authority to
purchase shares (existing and being sought) is 
used is 2.81%.
The authority will expire on 9 March 2006 
or at the conclusion of the next AGM (whichever 
is the earlier). It is the present intention of the
Directors to seek a similar authority annually.
Important notes about the 
Annual General Meeting
Date
Friday 10 September 2004.
Location
Great Eastern Hotel, Liverpool Street, London
EC2M 7QN.
Timing
The Meeting will start promptly at 12 noon and
shareholders wishing to attend are advised to be 
in the venue no later than 11.50 am. The reception
area will be open from 11.30 am, from which time
refreshments will be served.
Travel information
See map on the reverse of Admittance Card for the
location of the Great Eastern Hotel, and the nearest
underground and railway stations. The venue is less
than five minutes’ walk from Liverpool Street station.
There are no car parking facilities at the venue.
Admission
Please bring the Admittance Card with you to 
the Meeting. You may be asked to show the Card
before being admitted to the venue. Shareholders
and proxy holders may also be required to provide
proof of identity. The registration process may take
longer without these documents.
Facilities
The Great Eastern Hotel has wheelchair access. 
If you are planning to come to the Meeting and are
a wheelchair user, it would be helpful if you would
telephone the venue in advance on 020 7618 5618.
Enquiries and questions
Shareholders who intend to ask a question related
to the business of the Meeting are asked to provide
their name, address and question at the Registration
desk. Staff from Lloyds TSB Registrars will be on
hand to provide advice and assistance. 68 DS Smith Plc Annual Report 2004
SHAREHOLDER INFORMATION
Financial diary
24 June 2004
Preliminary announcement of results 
for the year ended 30 April 2004
18 August 2004
Ex-dividend date for ﬁnal dividend
10 September 2004
Annual General Meeting
21 September 2004
Payment of ﬁnal dividend
8 December 2004*
Announcement of interim results 
for the six months ended 31 October 2004
2 February 2005*
Ex-dividend date for interim dividend
8 March 2005*
Payment of interim dividend
30 June 2005*
Preliminary announcement of results 
for the year ended 30 April 2005
*Provisional date
Company website
The Company’s website at
www.dssmith.uk.com contains the latest
information for shareholders, including 
press releases and an updated financial diary.
Email alerts of the latest news, press releases
and financial reports about DS Smith may 
be obtained by registering for the email news
alert service on the website.
Share price information
The latest price of the Company’s ordinary
shares is available from the FT Cityline
service. Calls within the UK are charged 
at 60 pence per minute at all times. 
The telephone number is 0906 843 4044.
Alternatively click on
www.londonstockexchange.com. DS Smith’s
ticker symbol is SMDS. It is recommended
that you consult your financial adviser and
verify information obtained from these services
before making any investment decision.
Registered ofﬁce and advisers
Secretary and Registered Ofﬁce
Carolyn Cattermole
4-16 Artillery Row
London SW1P 1RZ
Registered in England No: 1377658
Auditor
KPMG Audit Plc
8 Salisbury Square
London EC4Y 8BB
Solicitor
Allen & Overy
One New Change
London EC4M 9QQ
Principal Clearing Bank
The Royal Bank of Scotland
135 Bishopsgate
London EC2M 3UR
Stockbroker
Cazenove & Co. Ltd
20 Moorgate
London EC2R 6DA
Investment Bank
UBS
2 Finsbury Avenue
London EC2M 2PP
Registrar
Lloyds TSB Registrars
The Causeway
Worthing
West Sussex BN99 6DA
Registrar queries
UK telephone 0870 600 3970
Overseas telephone +44 121 415 7047
On the internet at www.shareview.co.uk
Registrar
Please contact our Registrar at the address
below to advise of a change of address or for
any enquiries relating to dividend payments,
lost share certificates or other share
registration matters.
The Registrar provides on-line facilities 
at www.shareview.co.uk. Once you have
registered you will be able to access
information on your DS Smith Plc
shareholding, update your personal 
details and amend your dividend payment
instructions on-line without having to 
call or write to the Registrar.
Dividends
Shareholders who wish to have their dividends
paid directly into a bank or building society
account should contact the Registrar. In
addition, the Registrar is now able to pay
dividends in 35 foreign currencies. This service
is called ‘TAPS’ and enables the payment of
your dividends directly into your bank account
in your home currency. A charge of £2.50 is
deducted from each dividend payment to cover
the costs involved. Please contact the Registrar
to request further information.
Share dealing services
The Registrar offers a real time telephone 
and internet dealing service. Further details
including terms and rates can be obtained 
by logging on to the website at
www.shareview/dealing.co.uk or by calling
0870 850 0852. Lines are open between 
8.30 am and 4.30 pm, Monday to Friday.
Cazenove operates a low cost share dealing
service for private investors who wish to 
buy or sell ordinary shares of the Company.
This is an execution-only service and further
details can be obtained from The Share
Dealing Service, Cazenove & Co. Ltd,
20 Moorgate, London EC2R 6DA. 
Telephone 020 7606 1768. Please note 
there is a minimum level of £500 for
investment in shares using this service.